Spain’s Catalonia Suspends Social Service Payments

Catalonia, Spain’s most indebted region, said Tuesday it could not pay subsidies in July to hospitals, old age homes and other social services already reeling from sharp budget cuts.

by Agence France-Presse
MSN

“It is due to a problem of liquidity,” said a spokeswoman for the Catalan regional government’s economy ministry, adding that the situation “will start to return to normal in September.”

Catalonia last week said it was considering tapping a new central government fund worth up to 18 billion euros ($22 billion) set up to help regional governments in difficulty.

But it is in conflict with the central government over tough deficit and debt targets imposed on the regions.

In protest, the Catalan government boycotted a meeting with Budget Minister Cristobal Montoro in Madrid Tuesday at which regional finance officials approved the government’s debt limits for the regions.

The Catalan government would not say how much money in grants it would not be able to pay, but left-leaning daily El Pais put the figure at 400 million euros.

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