Sunday, June 19, 2011

It isn’t just towns in the area that owe money

According to the Spanish daily El Pais, the Valencia Region has debts of about €1.3 billion relating just to unpaid healthcare bills from the last two fiscal years, 2009 and 2010. It is further alleged that the region will have another “black hole” in its funding of €1.3 billion for the current year.

Last March, small healthcare suppliers, who had not been paid by the Valencia regional government for some time, where so desperate to highlight their plight that they formed a group to represent their cause, and try to recoup some of their outstanding invoices from Valencia.

The worrying fact is that, last year the debt of the Valencia Region stood at some €17.6 billion, which equates to around 17% of the region’s Gross Domestic Product. Simply to meet interest payments on this debt requires €680 million per quarter, or €2.7 billion per year.

The crisis that has beset certain European countries comes when they are unable to finance the repayment of loans on the debts they built up through years of mismanagement and overspending. The same principal applies to a regional government as we have in Valencia, which, according to El Pais, is the most indebted region in the whole of Spain.

As with the small healthcare providers who have not been paid their bills e.g. local chemist’s shops not being given their prescription payments. Eventually the region’s financial crisis will hit individuals and businesses alike. At that point the s*** will hit the fan!

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