Spain regional debt up 22 percent to $176 billion

AP News
Posted: Dec 16, 2011 8:05 AM
Spain regional debt up 22 percent to $176 billion

Debt levels for Spain's cash-strapped 17 semiautonomous regions have soared 22 percent over the past year, the country's central bank said Friday.

Bank of Spain quarterly figures showed regional debt rose to euro135.2 billion ($176.02 billion) in September from euro110.72 billion in the same month last year.

A near two-year recession after a real estate bubble collapse has left Spain with swollen regional and national deficits, a stalled economy and 21.5 percent unemployment.

The bank says Spain's national debt rose nearly 15 percent on the year to euro706.34 billion ($919.6 billion) in the third quarter, representing 66 percent of GDP.

A new government under the conservative Popular Party leader Mariano Rajoy take offices later this month and is expected to introduce reforms in a bid to relaunch the economy.

Rajoy, who is to be sworn Dec. 21, warned Thursday that many of the measures would be unpopular. So far he has given no concrete details of his plans.

In its report, the Bank of Spain said the powerful northeastern region of Catalonia, whose capital is Barcelona, had the most debt, euro39.27 billion ($51.1 billion) almost a third of the total. Valencia on the east coast was second with euro20.47 billion ($26.7 billion) and Madrid was third with euro15.19 billion ($19.8 billion).

The central government and the regions are under intense pressure to restrict spending so Spain can meet its 2011 deficit goal of some 6 percent of GDP.

Many regions are facing severe cash-flow problems and are having to delay payments to suppliers.

An example of the cutbacks came Thursday, when Spain's Woman's Institute said nearly 100 centers for the victims of domestic violence face closure next year in the central Castilla-la-Mancha region.

Centers for drug addicts in Madrid are facing a similar fate.

In an effort to ease the regions' plight, acting Finance Minister Elena Salgado said the central government would release euro4.5 billion ($5.9 billion) in funds due to the regions on Dec. 20 instead of Dec. 23.