Bloomberg News

Catalonia Aims to Sell School, Police Buildings to Raise Funds

October 05, 2011

Oct. 5 (Bloomberg) -- Catalonia, Spain’s biggest region and second-most indebted, may sell schools and police buildings next year as part of plans to raise $1.06 billion to cut the deficit, according to Jacint Boixasa, the director of assets for the area.

“We plan to raise 800 million euros ($1.06 billion) from real-estate sales next year,” Boixasa said in an interview in Barcelona last week. “Some of that will come from selling the underlying real estate -- but not the management -- of schools, police stations and first aid centers.” He declined to say how many public installations would be included in the plan.

Catalonia, the wealthiest of Spain’s 17 semi-autonomous regions with an economy the size of Portugal’s, had the fourth- largest budget gap in 2010, at 3.86 percent of its gross domestic product. It also had the second-highest debt, at 19.2 percent of GDP in the second quarter.

Catalonia is already working against the clock to close the sale of 37 publicly owned properties for 550 million euros before year-end to meet its 2011 budget deficit target.

Spanish regions, which control more than a third of public spending, will play a pivotal role in the nation’s effort to cut its deficit to 6 percent of GDP this year from 9.2 percent in 2010 as the country tries to avoid following Greece, Ireland and Portugal in requiring a bailout. In July, Moody’s Investors Service put Spain’s credit rating on review for a downgrade, citing the worsening finances in the regions.

Debt Levels

The debt burden of Spain’s 17 semi-autonomous regions’ surged to a record 133.2 billion euros, or 12.4 percent of GDP, in the second quarter from 11.6 percent in the previous three months as tax revenue from slumping real estate and land sales dropped.

All the regions except Catalonia pledged to limit their deficits to 1.3 percent of GDP to help cut the national budget gap, currently the third highest in the euro region after Greece and Ireland.

Following local elections last year, the incoming government of Catalonia said the 2010 deficit was 60 percent wider than its predecessors had acknowledged. It plans a deficit equal to 2.7 percent of GDP this year, more than twice the official goal.

--With assistance from Emma Ross-Thomas in Madrid, Editors: Andrew Davis, Simone Meier

To contact the reporter on this story: Sharon Smyth in Madrid at ssmyth2@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net. Craig Stirling at cstirling1@bloomberg.net


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