Catalan government to take Spain to court over non-payment, encourages other regional governments to join in

During an appearance before the parliament’s Economy Committee on Tuesday, Pere Aragonès —the Finance Minister and Vice President of the Catalan government— announced that the executive is considering filing a lawsuit for the non-payment of overdue regional funds. Specifically, at next Tuesday’s cabinet meeting Aragonès will ask permission to file an administrative lawsuit to receive the outstanding sum.

“These funds belong to the people of Catalonia and we are entitled to them by law”, he emphasised, and he warned that the Spanish government is holding on to the cash “in an irregular manner”, in his view. Additionally, the vice president encouraged the other regions that find themselves in the same predicament to follow suit and take the Spanish government to court.

Earlier this week the Catalan authorities had denounced the “financial stranglehold” caused by the Spanish government and urged Madrid to pay the €1.3bn they are owed from advance payments and VAT revenue. The Catalan government’s deputy leader noted that the revenue they expect to receive from Madrid has already been collected and, therefore, could be transferred immediately.

Pere Aragonès insisted that “our response is to set the budgetary priorities till the end of the year and insist that those funds belong to us”. Aragonès emphasised that budget cuts of about 6 per cent will not affect welfare services. “Government pay cheques, basic income benefits, government contracts and funding already allocated and earmarked funds, such as the EU’s aid paid to farmers” will be unaffected.

All regional governments —except in the Basque Country and Navarre— have been hit by the same financial woes when funds they were banking on were not transferred. There are two reasons for this. First of all, the changes to VAT brought in by PP’s Treasury minister Cristóbal Montoro mean that VAT revenue has not been paid yet. Secondly, Madrid has failed to update the advance payments that regional governments receive to fund their administration.

To make matters worse, the Catalan government has failed to pass a new budget bill in parliament and it is operating on an extension of the previous budget. As a matter of fact, a few months ago a credit extension was approved in order to cover an additional €800 in expenses, but at the time the government was banking on receiving the updated advance payments that have not been made so far.