State financial aid for Spanish regional governments to pay their debt

Automatic summary, not yet reviewed

1. This royal decree-lawroyal decree-law A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses. creates a temporary, voluntary liquidity support mechanism so that the Autonomous Communities can pay their debt maturities and finance the borrowing allowed under budget stability rules.
2. To join, a region must apply to the Ministry of Finance before December 31, 2012, and its regional government council must approve an agreement to join and commit to meeting the mechanism's conditions.
3. Regions that join must submit a fiscal adjustment plan within fifteen days, send monthly information on their treasury and debt, and accept that the State will directly pay their public debt maturities.
4. The Autonomous Liquidity Fund is created, endowed with €18 billion from the State Budget, with its financial management assigned to the Official Credit Institute.
5. The State lends the money through credit operations paid out in installments, and guarantees repayment by withholding each region's resources from the regional financing system if it does not pay.
6. The 2012 State Budget law is amended to regulate State guarantees for bond issues by credit institutions, with a cap of €55 billion and a 0.5% issuance fee.

Who it affects

• Autonomous Communities struggling to pay their debt: They can request money from the new Autonomous Liquidity Fund, in exchange for meeting an adjustment plan and accepting oversight.
• Local governments in the Basque Country and Navarre: They can join the supplier payment mechanism if the required agreements are signed.
• Spanish credit institutions: They can apply for State guarantees on their bond issues until December 15, 2012.
• Bank of Spain and the Fund for Orderly Bank Restructuring: They can share information with European institutions and act to facilitate European financial aid for bank recapitalization.

Words worth knowing

Liquidez (liquidity)

Money available to pay what is owed in the short term.

Plan de ajuste (adjustment plan)

A document where the region explains which spending cuts and revenue measures it will apply to meet its deficit and debt targets.

Deuda viva (outstanding debt)

Money still owed on loans already received.

Aval (guarantee)

A guarantee: if the borrowing institution does not pay, the State pays instead.

Intervención General de la Administración del Estado

The public body that audits and oversees the economic management of public administrations.

royal decree-law

A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses.

decree-law

A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries