Catalonia requests 9 billion euros from Spain rescue fund

MADRID Tue Jan 29, 2013 7:11pm GMT

MADRID (Reuters) - The northern Spanish region of Catalonia said on Tuesday it had formally requested 9.1 billion euros ($12.3 billion) for 2013 from the central government's regional liquidity fund and called for a lighter deficit reduction target.

The prosperous but indebted region requested 5.4 billion euros from Spain's regional liquidity fund in 2012, set up to help indebted regions pay their debts. Catalonia faces 13.6 billion euros of debt redemptions this year.

Catalonia would use 7.7 billion euros to fund bond payments, while the rest would go towards reaching its 2013 deficit reduction target of 0.7 percent, the regional government said in a statement.

Catalonia, which accounts for around a fifth of Spain's economic output, has embarked on an uncertain journey towards a referendum on independence, pushing for a vote in 2014.

The regional government also said that the deficit reduction target should be reduced if pressure on the central government to slash its deficit eases.

On Monday, the European Union's Economic and Monetary Affairs Commissioner Olli Rehn said fiscal targets could be pushed further out if the economy was found to have worsened, while praising Spain's efforts to cut its deficit.

Spain's regional liquidity fund, known as the FLA, has 23 billion euros at its disposal this year and the government has said it will raise more money if necessary.

The rescue fund had a budget of 18 billion euros in 2012, when nine regions requested aid. The high-spending regions were largely shut out of debt markets in 2012, making a government lifeline essential to pay their bills.

Funds from the Treasury, Spanish banks and the state lottery were used to set up the regional pot.

(Reporting by Clare Kane; Editing by Jesus Aguado; editing by Ron Askew)