Fondo de Liquidez Autonómica

The Fondo de Liquidez Autonómica (FLA) is a line of credit or a loan fund with low-interest loans that the Spanish government created for the Spanish Autonomous Communities in July 2012 as part of the euro crisis .

Emergence

There are 17 Autonomous Communities, often called 'regions' for short. In the first half of 2012, interest rates on medium and long-term bonds issued by the regions rose sharply. Some of the heavily indebted regions were unable to take out the loans necessary to cover their deficits.

In Spain there was a change of government after the parliamentary elections on November 20, 2011 ; the conservative Partido Popular won an absolute majority. Zapatero's successor was Mariano Rajoy . The new government therefore created the Fondo de Liquidez Autonómica as a rescue fund . The regions received the loans from the FLA mainly for the purpose of using this ("fresh") money to repay their maturing bonds on time.

The FLA is under the jurisdiction of the 'Instituto de Credito Oficial'; this is subordinate to the Ministry of Economy and Competitiveness (current Minister: Luis de Guindos ).

Claims

2012

• The Valencia region was the first to approach the fund (on July 20, 2012) asking for EUR 3.5 billion. She received a total of 4.5 billion euros.

• The Murcia region asked for 300 million euros on July 23; on September 28, she increased the request to 527.5 million euros.

• Next, Catalonia received 5,023 million plus 410 million = 5,433 million euros, although the government recess the October 31 onate year 5,370 million euros.

• Andalusia applied for 4,906 million euros on September 26, 2012.

• On September 27, Castile-La Mancha applied for € 848 million.

• The Canary Islands were the sixth region to apply for EUR 756.8 million.

• On October 19, 2012, the Balearic Islands applied for 355 and Asturias for a loan of 261.7 million euros.

• On October 26, 2012, Cantabria asked the Spanish government for a loan worth 137.2 million euros.

The government announced that the fund now still has 338.3 million euros, i.e. 1.88% of its initial volume of 18,000 million (= 18 billion) euros.

If other regions ask for help, they should get money from a fund of the 'Ministry of Finance and Public Administration' (current Minister: Cristóbal Montoro ) and from banks and financial institutions that should be ready to give this type of loan or such to buy fixed income from the regions.

Web links

• Real Decreto-ley 21/2012, de 13 de julio, de medidas de liquidez de las Administraciones públicas y en el ámbito financiero , see Chapter III (www.boe.es = Boletín Oficial del Estado = the counterpart to the German Federal Law Gazette )
• Manager Magazin October 23, 2012: Moody's downgrades Spanish regions

Individual evidence

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