It isn’t just Bigastro that is in debt, many of the town councils in Spain owe large sums of money to banks. In fact the total debt of councils is reportedly to be around 34,594 million Euros – up by 9% from 2008.
The problem is so bad, the government stepped in and threatened to impose a credit ban last Monday to prevent councils going into bankruptcy. Many councils are so much in debt that they cannot pay their workers wages. However, in a change of heart, the government has now decided to allow councils to request credit from public or private institutions until the end of 2011.
The government will be advising town halls about how to invest the money they will save from the 5% cut in wages that will be imposed in July.