120716 reforms spain liquidity funding regions

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LIQUIDITY MECHANISM FOR THE REGIONS

July 13th 2012


1. GENERAL SCHEME

Spanish Treasury

Beneficiary Autonomous Regions

Non participating Autonomous Regions

Liquid ity (Loan s)

Funds

Backe d reven by Tax ues fr om partic i p a Auton t omou ing s Reg ions

Liquidity FUND* *Managed by ICO

Tax revenues from Autonomous Regions

Ministry of Finance

Monitoring of Rebalancing Plans/ Monitoring of Cash position 2


2. FUNDING 1. Amount: up to 18 billion euros 2. Beneficiaries: Autonomous Regions that voluntarily adhere 3. Financed concepts: cash requirements due to: a) b) c)

Redemptions in capital markets Redemptions of loans by international bodies Current deficit needs

4. Creditor: Central Government.- ICO will manage the FUND 5. Financial conditions: To be determined by the Government 6. Funding Sources: 1. 2.

Lotteries: Extraordinary dividend payment (€6 bn) Treasury’s Financial Resources

7. The debt will be Autonomous Regions’ Debt and not State Debt 8. The inclusion of the liquidity mechanism’s funding needs will not alter the Kingdom of Spain’s funding programme for the rest of the year. 3


3. FISCAL AND FINANCIAL CONDITIONALITY 1. Fiscal Conditionality: a) b) c) d) e) f)

Updated Rebalancing Plans with additional information on Cash balance of each Autonomous Region The Rebalancing plans must be approved by the Government Monthly budgetary execution reporting and assessment on the implementation of the Rebalancing Plan Additional control by State Auditor’s Office Potential direct intervention of the budget accounts in case of risk of deviation from Rebalancing Plans (Art. 26 of Budget Stability Law) Only current deficit needs in line with target will be authorised

2. Financial Conditionality: a) b)

Restrictive Financial conditions for the beneficiary Autonomous Region All new debt authorisations require Treasury’s approval

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