The pain in Spain

Spain likes shovelling debt under the carpet where it hopes no one will notice.

I've blogged before about the debts of Spanish provincial authorities (click the Spain label below). Now we learn that big power groups have recently stepped up pressure on the likely incoming Spanish government to tackle a deficit they accumulated by selling power at regulated tariffs too low to cover costs for 10 years. Ten years!

Spain deferred them by obliging utilities to hold these costs on their balance sheets as a state-backed debt known as the "tariff deficit", promising the consumer would repay this debt through gradual increases in electricity bills.

The Socialist government ... reached a deal with utilities companies last year to eliminate the tariff deficit.

How much are we talking about here? Hm, a mere 20 billion euros.

And this is a government whose costs of borrowing are rising, and which yesterday couldn't sell all the bonds it wanted to.

If this is the type of off balance sheet financing that Spanish governments like, what other debt have they parked in the Spanish economy? That's quite apart from what the provinces have been up to.

Hear Spain creak.