The new funding schedule: before Easter and with ordinality

BarcelonaMaría Jesús Montero announced a few days ago, after the Fiscal and Financial Policy Council (CPFF), that The new financing model would be presented between January and February of next year.Talks between the Ministry of Finance, the Catalan government, and Esquerra Republicana de Catalunya (ERC) remain ongoing, but according to sources familiar with the matter, the three parties have made progress toward guaranteeing one of the key points of the investiture agreement: the principle of ordinality—although the specifics of the pact will need to be examined once it is finalized. This means that Catalonia will not be downgraded in terms of the resources it receives relative to those it contributes. While the agreement is still pending, the three parties have established a timeline for its implementation before Montero leaves the Spanish government to run in the Andalusian elections. The goal is for the new model to be approved before Easter. However, there are many obstacles to overcome, and no one is ruling out the possibility that the agreement will not be reached.

Initially, the three parties agreed that a new Fiscal and Financial Policy Council meeting would be held in January and February, at which Montero would present the new model, and another meeting before Easter, at which the necessary legislative modifications to implement the new system would be presented. From there, the next steps would focus on the standard legislative process. That is, it would first need to be approved by the Council of Ministers and then submitted to Congress. It is in the lower house where Montero's proposal hinges, because it would need the support of the coalition partners in the face of the more than likely reservations of the People's Party (PP).

And at this point, it is crucial to know what Junts will do, especially now that the party has openly positioned itself in opposition. However, the members of the Junts per Catalunya party had already expressed criticism of the pact the Republicans signed with the Socialists, arguing that it is not a true economic agreement and that the proposal is not ambitious enough. But the agreement for the new financing model will not only have to convince the Junts per Catalunya members, but will also require the support of parties like Compromís, which until now had shown reservations, and also Podemos. If the Socialists and Republicans fail to convince these groups, the eventual agreement will be worthless. Sources at the Ministry of Finance, in this regard, indicated that it was up to Esquerra Republicana to convince Junts per Catalunya. One of the factors that could sway the Junts per Catalunya members is if steps were taken to allow Carles Puigdemont to return to Catalonia.

The five folders

Whether the negotiators' proposed timetable is met depends on progress regarding the agreement's content. In recent weeks, steps have been taken to guarantee the principle of ordinality and the calculation of the adjusted population, one of the issues on which the Treasury and the Left had disagreed until now. However, it remains to be seen how this will be implemented. For now, neither side considers the agreement finalized, and it must also specify the amount the State would contribute to Catalonia, which, according to sources, would be close to 4.5 billion euros. Alongside the financing model, the Republicans are also negotiating four other issues with the Treasury.

Initially, the collection of personal income tax (IRPF) was stalled due to disagreements between the two parties. Esquerra, without the PSOE's support, introduced a bill in Congress to promote legal changes that would allow the Catalan Tax Agency (Agència Tributària de Catalunya) to collect income tax, but for now, they have left it unresolved. standbyIt has not been brought up for debate in the lower house plenary session, pending an agreement with the Socialists. Negotiators are also considering expanding Catalonia's regulatory powers over taxes and, consequently, limiting Madrid's tax dumping. This matter runs parallel to negotiations on the financing of non-homogeneous responsibilities, such as the Mossos d'Esquadra (Catalan police) and prisons, which require additional funding. Esquerra Republicana (ERC) wants these resources to be structural and not negotiated outside the existing financing model. Finally, Oriol Junqueras' party also anticipates that these negotiations will lead to an agreement to establish the investment consortium that the Socialists and Republicans agreed upon for Salvador Illa's investiture, which was intended to oversee the execution of state investments. This was discussed at the Bilateral Commission meeting in February. The Spanish and Catalan governments agreed to create a working group to launch this consortium before the end of this year. However, at the moment it seems unlikely that this forecast can be met.