MADRID Dec 11 Spain will not use the state
lottery to raise funds for its cash-strapped regions, the
Treasury said on Tuesday, after pay-outs to nine autonomous
territories came in around a third less than expected.
"The Treasury has decided not to proceed with the national
lottery debt plan because this additional financing is not
needed," Spain's Treasury said in a statement.
The lottery, which boasts the world's biggest jackpot, is
Spain's most profitable publicly-owned company.
The country's 17 regional governments lie at the heart of
concerns about Spain's ability to meet its strict Europe-agreed
deficit targets as a second recession in three years means
falling tax take for the regions, which control healthcare
Spain set up the regional liquidity fund (FLA) earlier this
year to help local governments with their borrowing costs. It
agreed to pay out 12.6 billion euros ($16.4 billion)in 2012, the
Treasury also said, less than the 18 billion euros originally
Nine regions - Andalusia, Asturias, the Balearic Islands,
the Canary Islands, Cantabria, Castilla-La Mancha, Catalonia,
Murcia and Valencia - tapped the fund in 2012, the Treasury
Spain planned to use its national lottery, Sociedad Estatal
Loterias y Apuestas del Estado SA, to tap money markets for 6
billion euros to support the fund, with 4 billion euros from the
Treasury and the remainder from banks.
Banks had asked for changes in the proposed structure and
terms of the loan for the national lottery due to its Spanish
risk profile and lack of international business.
The government will set aside 23 billion euros for the
special fund, according to a budget amendment.
($1 = 0.7693 euros)
(Reporting by Clare Kane; Editing by Sonya Dowsett, Ron Askew)