World Bulletin / News Desk
Spain's central government said on Thursday it would soon back the debt repayments of the country's 17 regions and start proceedings this month to take over the finances of a group of regional budget sinners.
After meeting regional heads of finance, Treasury Minister Cristobal Montoro also said the deficit path for the autonomous communities would be relaxed in 2013.
It will however be tightened in 2014 and remain unchanged this year. The European Union has given Spain until 2014 to get its finances in line with EU rules.
"The fund will address specific debt repayments of autonomous regions which can't address them by themselves on an exceptional basis and the regions which use the fund will have to meet new conditions to clean up (their deficit)," Montoro said at a news conference in Madrid.
"It will have the state guarantee," he added, although he refused to give any additional detail before the mechanism is discussed and agreed on Friday at a weekly cabinet meeting.
The big debts of the regions and ailing banks - which will receive a lifeline of up to 100 billion euros from the EU - have pushed Spain closer to seeking a bailout for the state.
The regions are currently shut out of international financial markets and have long asked the state to help them meet 15 billion euros of debt repayments by year-end and ease their liquidity situation.
The central government had however until now delayed creating such a the mechanism because it feared it could affect its own rating, which is already on the verge of junk territory.
Montoro said the state lifeline would not be a free lunch for the regions which need it.
They will have to announce further deficit-cutting measures, strictly comply with their targets and fall under increased scrutiny from the central government.
A group of regions, whose current budget plans will not enable them to meet their deficit objectives, could even see their finances being taken over by the state if they repeatedly fail to adopt corrective measures.
Montoro declined to say how many regions would have to review their plans but sources in the regional governments said eight may be affected.
"There is a process of seven days. During these seven days we will analyse how close they are to meeting their objectives ... and in the case that we can't find an agreement the ministry would send them a warning," Montoro said.
The ministry set a new deficit objective of 0.7 percent of gross domestic product for the regions in 2013 from 0.5 percent previously. It however kept unchanged the target of 1.5 percent for this year and tightened it to 0.1 percent in 2014 from 0.3 percent earlier.
Since Britain voted last June to exit the European Union, the country's finance, car and airline sectors have been lobbying the loudest for continued access to the European single market.
France remained Germany's second largest trading partner while the US slipped from first to third place, as bilateral trade contracted by five percent to 165 billion euros.
Upcoming joint meeting seeks to tackle obstacles to trade between Turkey, Egypt
Next step in proposed Turkey-Israel natural gas pipeline project is to put words into action: Israeli conglomerate Delek
The unit was at 19.69 to the dollar, strengthening from around 19.90 on Thursday and up more than 10 percent from its record lows around 22.00 in early January.
The country's federal, state and local governments together achieved an overall surplus in their public finances of 23.7 billion euros ($25 billion) last year, according to Germany's statistics office Destatis.
Exchange rate dipped to as low as 3.5756 points, lowest figure since Jan 4.
European bank finances Turkey's Bozankaya, public transportation vehicles producer, to produce metro trains for Thailand
Net profit surged more than four times to £2.0 billion ($2.5 billion, 2.4 billion euros) in 2016 compared with net profit of £466 million a year earlier, LBG said in an earnings release.
Turkish lira becomes best performing emerging-market currency against U.S. dollar over last 3 weeks
ITC Executive Director Arancha Gonzalez says such moves would create 'snowball effect' of instability
Aude Fleurant, head of the armaments program at Sipri, told AFP that "competition is fierce among European producers" with France, Germany and Britain in the lead.
PSA, the parent company of France's Peugeot, Citroen and DS, has confirmed it is interested in taking over Opel, the German arm of US giant General Motors.
Progress has been made in Southern Gas Corridor project , says Azerbaijani president
Another positive assessment of the US economy and reassurance over tax reform from President Donald Trump was not enough to spur further buying in Asia after the past week's rally.
Comprehensive Economic and Trade Agreement (CETA) could provisionally apply from as early as April