* Pushes up total to eight regions seeking aid
* 18 bln euro fund close to running dry
* Govt declines to say whether will expand fund
By Rodrigo De Miguel and Jesús Aguado
MADRID, Oct 19 Spain's Balearic Islands and
Asturias became the latest regions to ask the central government
for aid on Friday, raising concerns Spain may have to expand a
18 billion euro ($23.5 billion) fund set up to help pay regional
Spain's autonomous communities are struggling to cover their
borrowing costs and their large debts are dragging on the
country's ability to rein in its deficit as it heads towards a
The Balearic Islands asked for 355 million euros of aid,
while Asturias asked for 262 million euros, the local
governments said, pushing the total number of regions that have
asked for aid up to eight.
The autonomous communities have been forced to apply to
central government for help in repaying debt and financing their
deficits because investor concern over the state of Spain's
finances has virtually shut them out of bond markets.
"It's crystal clear that the regions, apart from the fact
that they also have to reduce their own budget deficits, have
big difficulties in refinancing their debt," said economist
Martin van Vliet at ING.
The 18 billion euro fund is comprised of an 8 billion euro
loan from banks, mostly brought by Spain's top three lenders; 6
billion euros from lottery funding; and the remaining 4 billion
euros comes directly from state coffers.
The two requests mean that just over 17 billion euros of the
fund has now been tapped, leaving it with scarce resources to
cover other regions' funding needs and raising the possibility
the government will have to put in more money.
"It's looking increasingly likely that the central
government has to provide more money and that has ramifications
for their own financing," said ING's van Vliet.
Deputy Prime Minister Soraya Saenz de Santamaria declined to
say at the government's weekly press conference whether Spain
would increase the size of the fund.
"We will study in coming years if it's necessary to continue
with the fund or not depending on the evolution of the markets
and the financial sector," she said.
The Balearic Islands and Asturias join the Canary Islands,
Catalonia, Valencia, Murcia, Andalusia and Castilla La Mancha in
asking for help from the central government's fund.
There are 17 autonomous communities, ranging in size from
Catalonia which houses Spain's second-biggest city Barcelona and
has an economic output similar to Portugal's to small
wine-producing region La Rioja.
For a factbox on the Spanish region's financing needs,