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Catalonia plans to request 12,662 million from the Liquidity Fund in 2022

The Generalitat plans to borrow from Autonomous Liquidity Fund (FLA) a total of 12,662 million euros in 2022 , an amount slightly less than the 13,014 million requested in 2021 .

Sources from the Department of Economy of the Generalitat have ensured that this is the amount that is expected to request the the next year.

A total of 11,138 million euros of that amount will be used for face debt repayments , mainly to cover the payment of loans from previous years of the FLA and other liquidity mechanisms authorized by the State, although also to face other debt maturities.

The State implemented these instruments at the end s of 2012, in the midst of the financial crisis, to help communities have liquidity at a time when the financial markets

were closed to autonomy debt issues.

From the outset, those loans were given for ten years

, with the first two lacking, although since January 2020 they have been granted for twelve years, with four lacking.

In this way, the repayment of loans linked to these liquidity mechanisms increasingly weighs more on the amounts requested by Catalonia to the FLA, given that will accumulate year by year returns on debt incurred since 2012.

Adhered to the FLA s alvo in 2019 and 2020

The FLA, created in 2012, in the midst of the financial crisis, will be in effect for a decade next year. During all these years, Catalonia has been under this liquidity provision mechanism except for two years, in 2019 and 2020, when it was able to join the so-called Financial Facility Fund (FFF).

Catalonia was able to access this other mechanism, which implies more lax controls than the FLA, having complied in previous years, that is, in 2018 and 2019, with the three objectives of budgetary stability established by law (deficit, debt and expenditure rule).

According to data from the Treasury, at the end of 2021 Catalonia will have received a total of 13,552.8 million euros from the FLA, which which represents 43.49% of the total funds distributed among the communities adhering to said mechanism.

Idea of ​​returning to the markets

Despite dependence on the FLA, the Generalitat has always wanted to return to the financial markets, as stated by both the former Minister of Economy, Pere Aragonès, current President of the Generalitat, and the current Minister of Economy, Jaume Giró.

The crisis created by the covid-19 forced to postpone the plans of the Generalitat to issue debt and thus return to the financial markets .

However, last July the agency of credit rating Fitch raised the Generalitat's rating by two notches, which went from BB to BBB-, with stable outlook.

Thus, this agency stopped consider the Generalitat's debt as speculative grade, that is, as junk bond, and placed it, a decade later, at investment grade.

covid fund

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Beyond that interest in demonstrating financial sovereignty in the markets, the Generalitat continues to demand to the State to enable a covid fund also in 2022, to continue covering the extraordinary expenses generated by the pandemic.

And it is that this state fund has served to greatly alleviate the extraordinary bill created by the pandemic, both in 2020 and 2021, and the Generalitat claims that the covid-19 and the the crisis that it has unleashed will continue to be active next year and I must have extraordinary resources to cover this extra expense.

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