Another week, another rescue fund that is being tapped in Europe. The Spanish region of Valencia will call on the government’s 18 billion-euro regional rescue fund, the local authority said on July 20. El Pais reported that Murcia, in southern Spain, may also be looking for as much as 300 million euros from Madrid after the summer. Andalucia, Catalonia and Castilla-La Mancha may also ask for help, according to El Pais.
Spain’s IBEX 35 Index dropped 5.8 percent on July 20, in a steady decline from 11am. The news that the regional rescue facility was going to be used wasn’t expected by all, even though regional finances in Spain have been one of the least clear areas of Spain’s accounting since the debt crisis began.
Looking back a few months, one of the government decisions that now appears very fortunate was the postponing of the initial public offering of Spain’s national lottery – the IPO was put on ice by the finance ministry on Sept. 28. Market conditions didn’t “guarantee revenues that reflect the value of the operator,” the ministry said at the time.
They must be thanking their lucky stars. Spain is the world’s fourth-largest lottery market, and the lottery is going to provide 6 billion euros of the total 18 billion euros in the regional rescue fund – while allowing anyone, resident or visitor, to help in the bailout by buying a ticket.