UPDATE 2-Spain earmarks more funds for Catalonia as PM seeks votes for budget

Spain's Socialist government on Monday proposed a sharp rise in spending for Catalonia in its 2019 budget draft, which will need the support of pro-independence parties in the region to pass through parliament.

The fiscal plan is Prime Minister Pedro Sanchez's biggest legislative test since his minority administration took office in June, and he has not ruled out calling a snap national election if lawmakers reject it.

His party holds just 88 seats in Spain's 350-seat parliament.

In details of the draft published on Monday, the government proposed increasing funding for Catalonia to 16.8 percent of total regional spending from last year's 13.1 percent.

The region, which has clashed with Madrid over its drive for independence, will receive just over 2 billion euros ($2.3 billion) from central government plus another 200 million euros for infrastructure, the document showed.

That would take Catalonia ahead of Andalusia, the most populous of Spain's 17 regions, as the single largest beneficiary of funds from Madrid.

The Socialists ceded control of Andalusia in December in an election that ushered in a coalition of the conservative People's Party (PP) and centre-right Ciudadanos, supported by the far-right Vox party.

The PP and Ciudadanos are expected to vote against the budget while left-wing Podemos and lawmakers from the Basque Country have said they would back it.

UPSETTING OTHER REGIONS?

Catalonia's pro-secession government had no immediate comment on Monday's proposal.

Budget Minister Maria Jesus Montero expected protracted talks with Catalonia that were due to begin on Monday, adding that funding for the region was now in line with the law.

"Sometimes they surprise us with a favourable stance, sometimes an unfavourable one. We'll have to wait until the last moment before the (parliamentary) vote," she said.

Analysts say the government risks upsetting voters in other regions if it gives too much to the Catalans, which could overshadow the budget's higher social spending message.

Ciudadanos general secretary Jose Manuel Villegas called the draft "a gift for the separatists (and) ...bad for Spain.."

On Friday, the government said it would boost social spending this year while cutting the budget deficit to 1.3 percent of gross domestic product from last year's estimated 2.7 percent.

Montero said the deficit would end this year at between 2.2 and 2.4 percent if the budget was rejected.

She also outlined measures that might help the government attract more female voters, including tax breaks for companies employing women as board members, lower tax on female hygiene products and higher spending on preventing gender violence.

($1 = 0.8728 euros) (Writing by Paul Day and Andrei Khalip; editing by John Stonestreet)

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