Canaries seeks Spain bailout

Canaries seeks Spain bailout

Update 6 February 2014: Government spokesman Martín Marrero has announced today that the Canaries will be seeking €671m this year from the Fondo de Liquidez Autonómica (Regional Liquidity Fund). Sr Marrero said that the conditions attached to the bailout are more advantageous than those offered by the national bank. Moreover, they are better than the Canaries achieved with the last bailout since the interest rate is expected to be lower, at 3.9%. The loan will have a repayment term of ten years.

Sr Marrero said that last year’s bailout saved the Canaries €72m in interest compared to what they would have paid the Bank of Spain, and he regretted that the islands were not allowed to apply to international banks which have lower interest rates, a prohibition which forced the regional government to apply to the Fondo rather than financing as other governments routinely do.  He reiterated that the request for funds does not indicate that the Canaries are insolvent as a region, and that, as confirmed by the Bank of Spain, the islands are in good financial health.

Update 8 March 2013: The Canarian Government has requested further funds from the Fondo de Liquidez Autonómica for 2013, the maximum available to the region of €421.89 million. Attempts to acquire further funds are also being negotiated. The announcement was made by the minister for Economía, Hacienda y Seguridad, Javier González Ortiz, in a press release issued after the regional Government agreed to seek the funds based on an evaluation of the conditions set by Madrid. Sr Ortiz said that there might also be “partial solutions” to the Canaries’ finance requirements of €1,100 million, as laid down in the region’s budget for 2013.

Update 9 October: Despite the claim that there would be no conditions to this bailout, it seems there are indeed some. Already it is clear that any monies allocated will not be able to be used for salaries; that suppliers will have to be paid; and that there will have to be public sector cuts. This could actually get quite interesting, and herald some pretty ground-breaking cultural changes in these islands.

Original post 6 October 2012: The Canary Islands have become the sixth autonomous region of Spain to seek a bailout from the national government. The Canaries are seeking just over €750 million from the Fondo de Liquidez Autonómica (Regional Liquidity Fund) which has resources of some €18 billion.

President Paulino Rivero said that Madrid will not impose conditions for the assistance, and the Canaries’ economic commissioner, Javier González Ortiz, stressed that the islands have the lowest debt per capita ratio in Spain and that the application was not because the region was insolvent, but because the funding had more accessible conditions than other sources. It’s still a bailout, though, and the Canaries joins Andalucia, Catalonia, Murcia, Castilla-La Mancha, and Valencia in requesting help to a total of just over €16 billion.

 

2 Comments

  1. As some people are trying to imply on a forum, do you think that this is being partly caused by the Illegal Letting clampdown ??

    I think they are living in cloud cuckoo land but thought I’d ask you as you’ve got a better understanding of Canarian culture than me.

  2. Author

    No! It’s caused by, how to put this diplomatically, inadequacies of government …

    The real cause can be seen in the conditions that appear to have been laid down by, of all people, the Canarian who is now a minister in the Madrid government, Soría. If anyone knows what the governmental system is here, it’s him – he was deputy president here, after all, as recently as last year!

    The conditions are: pay your bills, stop driving your suppliers into bankruptcy, stop wasting money, stop over-employing people … and, by inference, make people who get public sector jobs get them on merit and make sure they are real jobs! Above all, be “transparent” …

    Illegal letting doesn’t come into this picture, and is anyway, really, a drop in the ocean, not least because much of the “income” generated was/is black market income. And even if it weren’t, that is how the government sees it.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.