MADRID, Spain - June 5 2011 - The central Spanish region of Castilla-La Mancha is bankrupt, according to the incoming administration of the rightwing Popular party (PP), an accusation that will deepen concerns about Spain’s budget deficit.

The claim has prompted angry denials from the Socialist government.

Spain’s 17 autonomous regions and its more than 8,000 municipalities, with $220 billion of accumulated debt between them, have become the latest worry for investors in Spain and its sovereign bonds.

Although the amount is less than a quarter of total public sector debt, regional debt has doubled since 2008. The 17 regions collectively exceeded official budget deficit limits in 2010, and appear likely to do so again this year despite repeated demands for compliance from the central government.

Catalonia, an economy the size of Portugal, says its deficit will be double the target.

Vicente Tirado, a senior PP politician in Castilla-La Mancha, said the region was “totally bankrupt”; owed suppliers - such as pharmaceutical companies that provide drugs for hospitals - a total of 2 billion euros in unpaid bills; and would have trouble finding the money to pay the region’s 76,000 civil servants next month.