Spain Approves Regional Spending Plans

Spain's government said 16 of the country's 17 regions are on track to meet this year's budget targets, a key part of its efforts to slash a towering budget deficit and ward off an international bailout, The Wall Street Journal reported. Budget Minister Cristóbal Montoro on Thursday hailed the approval of the regional spending plans, which have implemented measures equal to €18 billion ($22.9 billion) of spending cuts and increased tax revenue. He said this is the first step as Spain's central government—with stronger powers after the approval of tougher fiscal rules earlier this year—plans to monitor spending to ensure that regions meet budget-deficit targets. Separately, a senior Finance Ministry official said the government is preparing a new debt instrument that will allow the regions, currently shut out of financial markets, to raise money with the guarantee of the Spanish government. He said the ministry is in the process of defining the conditionality that will be attached to this government support. Asturias was the only region whose spending plan wasn't approved, following a three-hour meeting between Mr. Montoro and the country's regional finance chiefs. Asturias is a small northern region of little economic weight that had a contested election in late March and hasn't yet formed a stable government coalition. Spain's powerful regions—which account for almost half of government spending in the country, including key public services such as health care and education—have moved to the center of the country's fiscal crisis. With their long history of spending overruns, European Union officials and investors fear Spain won't be able to rein in the regions. This year, the regions' commitment to deep austerity cuts is crucial to the government's efforts to slash its budget deficit to 5.3% of gross domestic product this year from 8.5% of GDP in 2011. Read more. (Subscription required.)