Riches to rags for Spanish towns
By Blanca Rodríguez Piedra and Catherine MacDonald
PELEAS DE ABAJO, Spain (Reuters) - 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.
The 250 residents of Peleas de Abajo are embarrassed about the 4.6 million euros ($6 million) debt which equals about 20,000 euros ($26,000) per person, nearly 10 times the level to each inhabitant of Madrid.
"It's disgraceful, it's incredible a small town owes more (per person) than a big city," said Jose Ramon Guerras, 30, who runs the town's only bar, where a handful of men gather at lunch time to play cards.
Outside the bar, the streets are quiet. The only activity in the square is when a handful of women in their dressing gowns came out of their homes to meet the bread van.
It wasn't always this way. Continued...