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Disclaimer in Catalan government investment advice warns of shifting political sands

Document urges analysts to carry out their own research as independence push ramps up

The Catalan regional government is including a disclaimer in information that it sends out to investors about the “political evolution” that is taking place in the region, which could lead to “alternative institutional scenarios.” The text does not, however, make specific mention of the referendum on independence that the Generalitat, as it is known, is determined to hold later this year, despite fierce opposition from the central government in Madrid, which insists that such a vote would be illegal.

Catalan regional premier Carles Puigdemont in a file photo.
Catalan regional premier Carles Puigdemont in a file photo.

The government in the northeastern Spanish region has been ramping up the pressure in recent years to break away from the rest of Spain, and an informal poll on independence was held on November 9, 2014, when Artur Mas was premier of the Generalitat. A number of court rulings put paid to the referendum having an official nature, but the vote went ahead regardless. Around 2.3 million people voted out of an eligible voter pool of 6.3 million, according to the regional government’s own figures. Although 80% voted in favor of independence, it was dismissed by international observers as lacking sufficient guarantees of objectivity, given that it was organized and counted by pro-sovereignty activists and that many detractors of independence simply did not participate.

The document warns that the information it contains “is elaborated based on the present political situation and the existing legal framework”

The Catalan government updates the economic and financial information that it sends to investors every six months. In this latest presentation, which was signed off on last month, the macro-economic progress of the region is detailed, as well as the fiscal situation of the Catalan administration and the outlook for debt and the treasury. The document makes no mention of the ongoing quest for independence nor the planned referendum, but the Generalitat does include the disclaimer at the end of the document.

The document warns that the information it contains “is elaborated based on the present political situation and the existing legal framework, and does not contemplate the political developments taking place in Catalonia that could lead to alternative institutional scenarios that may take place in the future due to the different political debates existing in Catalonia, Spain and Europe.”

Artur Mas during the informal 2014 vote on independence.
Artur Mas during the informal 2014 vote on independence.

Sources from the Generalitat point out that when the document was published the October 1 date for the referendum had still not been announced. Even so, the Catalan executive had already defiantly stated on a number of occasions that there would be a “referendum or a referendum,” in the words of current regional premier Carles Puigdemont. Instead, the disclaimer warns that the information contained within it should be read in conjunction with all other documentation available about the Generalitat. The text concludes stating that investors should “carry out their own study” and evaluate and judge the “relevance of the information contained herein.”

Over the last five years, the document has been updated every six months to give holders of Catalan government debt the economic and financial situation of the administration. However, the plan now is to reach funds and financial institutions with the intention of issuing new bonds in the financial markets, which were closed off to several Spanish regions – including Catalonia – in 2012 given the ongoing financial crisis and the consequent skyrocketing cost of borrowing.

The text denounces the fact that the income for Spain’s regions is based on a “complex and unbalanced” model of financing

Around 78% of Catalan debt will be in the hands of the Spanish state by the end of this year, but sources from the Generalitat explained that around €6 billion is currently held by investors.

The document also details measures adopted by the regional government, from spending and personnel cuts, to the introduction of new taxes, such as those levied on sugary sodas and empty properties held on the books of banks.

The text also denounces the fact that the income for Spain’s regions is based on a “complex and unbalanced” model of financing, a system that it describes as “unsustainable” and that “must be renegotiated.”

English version by Simon Hunter.

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