Oriol Junqueras, with Artur Mas in 2012./ Photo: CDC/Flickr.
Miguel Cifuentes. Madrid
Catalonia is losing credibility in the international financial markets with the arrival of Oriol Junqueras as the Economics Minister in the Generalitat. His predecessor, Professor Mas Colell, had a brilliant curriculum as a professor and economist of prestige, with accredited professionalism. The new Economics Minister is a historian, with no curriculum as an economist or manager and presents a strong political profile, radical and ideological, in line with the separatist process in Catalonia.
To put it another way, Junqueras has an “inappropriate” profile to present himself before the international financial markets with any guarantee of respectability. It is scanty baggage to have been mayor of Sant Vicenç dels Horts, a small town along the industrial belt of Barcelona, in order to direct the finances of a region such as Catalonia, the Diplomat has learned from sources close to the investment banks Goldman Sachs and BNP Paris Bas and the international ratings agency Fitch.
All this could be irrelevant if it were not for the fact that Catalonia has had a credit rating of “junk bond” since 2012 by the leading international credit ratings agencies. And, as if this were not enough, its public finances are also in poor shape, with a debt of 34% of its GDP; an absolute dependence on the FLA (the Autonomous Regions Liquidity Fund) set up by the Government in Madrid to maintain its autonomy, pay salaries and pensions; and no access to the international financial markets to place public debt or obtain finance.
And not of minor importance is the confidence that inspires whosoever is the Minister of the Economy of Catalonia, who directs its public finances. Nor is the credibility and solvency that it offers international investors, both financiers and industrialist irrelevant. In fact the negative view in the public debt markets and in international financial circles has done no other than worsen since the illegal and unsuccessful separatist referendum of 2014 and the recent declaration of the roadmap to the independence of Parliament, annulled by the Constitutional Court.
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Junqueras’s lack of experience to be Economics Minister accentuates the fears
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Catalonia’s credibility in international financial markets has been suspect since 2012 when it began its independence stance. The new Catalan Government, more radical than its predecessor and equally separatist, has not won any points nor an iota of respectability. At least, this is what has transpired from recent negative analysis notes issued by banks such as the British Barclays or the Swiss UBS to their investment clients..
One has to remember that Standard&Poor’s and Moody’s lowered the Catalan credit rating in 2012 to that of junk bond. And last Friday, Moodys downgraded Catalan credit even further, to “negative”. Finally the third credit ratings agency of international renown, Fitch, also reduced Catalonia to junk bond status in November 2015, in other words a BB rating, with a NO investment rider, below the threshold of the majority of the Spanish autonomous communities. Fitch has rated negatively the attitude of contempt of both the Generalitat and the Catalan Parliament in that it puts at risk the support of the state for its finances and opens them up to the maximum instability.
The latest manifestations by Junqueras on the future of the Catalan debt has done no more than heighten the mistrust of international financiers. Junqueras is making “fanciful” declarations to the Catalan media and to some international financial media, on the lines of “Catalonia is more solvent than Spain and will be as a future independent State”, without supplying figures, with nothing more than his word and his nationalist ideology. .
Junqueras is making incredible statements for an economics minister, very serious if they are the products of his ignorance. And he is showing his ignorance or devilry by saying that Catalonia is more solvent than Spain. Spain’s credit rating by Standard&Poor’s, Moody’s and Fitch prove him a liar in no uncertain terms. Spain has a BBB+ rating, similar to Italy and three levels higher than Catalonia whose rating is classified as a junk bond.
