Sunday, May 22, 2011

Spain debt

prudentbear credit bubble bulletin quoting james politi at the Financial Times:
“The rapid growth of ‘hidden’ public debt in Spain is likely to be revealed by incoming regional and local administrations to be elected on Sunday, damaging Spain’s credibility in the bond markets… ‘It is clear that in some or even many regional governments the official accounts do not reflect the truth,’ says the research by Freemarket Corporate Intelligence… ‘It also seems clear that the new administrations, if there is a change of the party in power, are not going to take on the inherited debt without clarifying the details,’ the report says… Latest data from the Bank of Spain, calculated in accordance with European Union guidelines, show that the country’s 17 autonomous regions have nearly doubled their public debt to more than €115bn ($160bn) since 2008, while municipal and provincial debt has risen to €35bn. Central government debt stands at €488bn. But the Freemarket report recalls that public companies owned by local and regional governments are also heavily indebted, and that the figures of many of these groups do not have to be included in EU calculations. ‘In fact there are about 5,200 regional and local entities with indebtedness that is not included in the official accounts, amounting to some €26.4bn,’ it says. Another popular method of hiding public debt during the fiscal and financial crisis of the past three years has been to leave bills unpaid.”

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