Riches to rags for Spanish towns
Thursday, March 15, 2012 @ 12:28 PM
Fifty years ago Peleas de Abajo was a center of farming innovation. Now it is famous for claiming to be Spain's most indebted municipality after investments made during the country's boom years went sour.
The small town in the northwestern region of Castilla y Leon is struggling to pay its bills and service a pile of debt that accumulated from an investment in a rest home 15 years ago when cheap loans were plentiful.
The riches to rags story is typical of towns and regions across the country. After years of overspending, their finances are under scrutiny as Spain tries to rein in its budget deficit just as the economy heads towards recession.
Every euro is being scrutinized in an austerity drive to chop Spain's deficit to the European Union limit of 3 percent of gross domestic product next year from 8.5 percent in 2011. Town halls alone generated a deficit of 0.4 percent of GDP last year.
Read more at Reuters.com