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Spain passes measures to control Catalan finances ahead of independence vote

MADRID (Reuters) - The Spanish government on Friday passed measures to increase control over how Catalonia spends its money in an effort to stop the regional administration from using state cash to pay for an illegal independence referendum.

The wealthy northeastern region launched its official campaign for an independence referendum on Thursday in defiance of Madrid, which has declared the process illegal, and the Constitutional Court, which has suspended the vote.

The Catalan authorities could not be trusted to spend the money on public services rather than the planned Oct. 1 vote, Budget Minister Cristobal Montoro said on Friday. The central government will take over the funding of most essential public services in the region, he said.

“These measures are to guarantee that not one euro will go toward financing illegal acts,” Montoro said following the weekly cabinet meeting.

The increased control on the region’s financing would continue for as long as the “exceptional” situation continues, Montoro said.

Spain’s 17 regions pay taxes to the central government which then redistributes funds back to regional heads for local social security, police and emergency services and education, a system that Catalans claim is weighed against it.

Since July, Madrid has obliged the Catalan government to provide weekly spending reports in an attempt to guarantee that public cash is not used to organize the Oct. 1 referendum.

On Thursday, Catalan regional Vice President Oriol Junqueras said the arrangement implied “political control” and had nothing to do with budget stability, though Montoro on Friday disagreed, saying the measures were within budget stability rules.

Catalonia, an industrial region with a strong export sector and a thriving tourist destination, produces about a fifth of the country’s total economic output but complains it receives a lot less back.

Montoro said he would appear before parliament next week to give the full details of the measures which would also include a demand by Madrid that the central government oversees all short-term debt operations by the regional government.

Reporting by Paul Day and Blanca Rodriguez; Editing by Sonya Dowsett and Angus MacSwan