Sunday, December 10, 2017

Cati And The 4,500 Million

Let's not talk about writing off Third World debt, let's talk Spanish debt - Spanish regional debt, one region in particular. If you happen to be a Balearic finance ministry, and I accept that none of you are, it's a pretty good deal if you can get the main man with the national piggy bank to wipe off the minor matter of 4,500 million euros. Remove that slight inconvenience, and the regional budget will boom further than it already has. Crikey, they might even be able to dispense with tourist tax revenue.

Cati Cladera, for she is the Balearic finance minister, has devoted more or less her entire tenure in pursuit of pots of gold which, were they to be forthcoming, would up the chances of her still being finance minister after the next election. Or so she might hope (see below). She has variously harangued and cosied up to the minister for the national piggy bank, the count with the keys to the mountains of gold, Cristobal Montoro. We are currently in a renewed phase when she has a go at him and is then nice to him in consecutive sentences. Ultimately, he is the keyholder, so there's only so much chastising that she can indulge in.

It isn't entirely Montoro's fault that the Balearic government owes Madrid well over 6,000 million euros. There have, after all, been his predecessors. They are equally to blame, and this is because they haven't seen fit to change the regional financing regime. As a consequence, the Balearic debt mountain has risen to - in total - something around 9,000 million. The bulk of this, the 6,000 million-plus, is Madrid's, and Madrid will probably have to wait for hell (or Catalonia) to freeze over before it ever gets it back. Out of this 9,000 million, one can set aside what's owed to nasty capitalists like banks. Or rather, one can't set this aside - as in writing it off - because banks generally don't operate like that. Which is probably just as well, unless one wishes the entire global financial system to finally and terminally implode.

Debt owed to national governments is a different matter. Of course it is, especially if a national government is solely responsible for half the total debt because of an unfair financing system. This is the story according to Cati anyway. How she arrives at a convenient roughly 50% (the 4,500 million), I haven't the faintest idea. Let's just accept that she's taken out a bit of paper and come up with the figure. Who is anyone to disagree? She does at least appear to accept, it should be pointed out, that the remaining 1,500 million-plus owed to Madrid isn't actually Madrid's fault. Which is reasonable of her.

So, is Montoro about to accede to Cati's request? Erm, probably not. Just as he is also unlikely to go along with various other Cati demands, such as a revision (favourable revision) of the entire economic regime for the Balearics, of which the financing system is a part. Montoro got the leader of the Balearic Partido Popular, Biel Company, to pass a message on to Cati last week. There's a bit of a problem with setting the budget for next year, so there'll be no moves on this.

If one interpreted what Montoro was saying, it wasn't that he isn't considering a revision but that he was wanting Cati's boss, Francina Armengol, to have a word in the shell-like of her boss, Pedro Sánchez. If PSOE were to stop being obstructive, the national budget could be set, and then - bingo! - here's a new financing deal for the Balearics. Maybe.

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