Spain's Valencia seeks $A5.4bn rescue

30 Aug 2012, 11:20 pm   -   Source: AAP

Spain's eastern Valencia region will ask for a rescue of more than 4.5 billion euros ($A5.44 billion) from the central government.

The Valencia region will ask for a rescue of more than 4.5 billion euros ($A5.44 billion) from the Spanish government.

"Yes, I confirm the figure," a government spokesman said on Thursday when asked about Spanish media reports on the plea, which comes two days after Catalonia announced it would seek 5.0 billion euros.

The regional president, Alberto Fabra, gave the figure while visiting a factory in the Valencian city of Castellon, he confirmed.

Valencia had a debt of more than 20 billion euros at the end of 2011, equal to about 20 per cent of its entire economic output. It faces debt repayments of 2.88 billion euros in the second half of 2012.

The region had estimated its needs at 3.5 billion euros, but Fabra added "more than a billion" euros to cover monies owed by the region to municipalities.

The request, which adds to a growing list of demands including Catalonia's, comes as Spain itself is in the sights of investors who fear Madrid will need a bailout to meet debt repayments due this autumn.

Spanish Prime Minister Mariano Rajoy was seeking support from visiting French President Francois Hollande just as the news broke of Valencia's financial plea.

Analysts expect more demands to roll in from the regions, weakened by a 2008 property crash.

The Spanish government created an 18 billion euro fund in July to meet those needs, financed by six billion euros from the national lottery, eight billion euros from financial entities and four billion euros from the Treasury.

The fund is expected to be operational within weeks.

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