The Airef warns that the regional debt forgiveness will remain "lame" without reforming financing
It forecasts that the Spanish economy will grow this year more than expected, although the absence of budgets "does not help it"
Santander / MadridThe Airef, the independent body that controls public finances, warns that the debt write-off for autonomous communities will be "flawed" if not accompanied by a reform of the regional financing system. The president of Airef, Inés Olóndriz, has argued that "the logical course of action" would be: first, "realistic objectives", second, the reform of the financing system, and third, "measures to alleviate debt".
The debt write-off was one of ERC's conditions for investing Pedro Sánchez in 2023. The initiative reached Congress in December and was scheduled to be voted on in one of the first plenary sessions of 2026, but it is still pending. It is foreseen that Catalonia will clear about 17,000 million euros of the debt it owes to the regional liquidity fund (FLA), the mechanism created to seek an alternative to the communities' inability to access markets during the financial crisis. The fiscal scenarios projected by Airef at the moment do not include the debt write-off because the body does not consider measures "until they materialize".
The fiscal authority has always said that the debt write-off must go hand in hand with new financing for autonomous communities because it believes that the current model has plunged the regions into a situation of underfunding. The Treasury is still trying to finalize the text of the reform, to which the PP communities have already closed the door. If it manages to draft a document, it will have to pass through the Council of Fiscal and Financial Policy and the Council of Ministers before going to Congress.
Upward forecasts
In parallel, Airef believes that the Spanish economy is growing more this year than initially estimated, and foresees raising the forecast from 2.2% "one or two tenths", to 2.4%. According to Olóndriz, the macroeconomic data known so far "in most cases, are slightly better" than expected.
The president of Airef explained that "all the institutions" that prepare macroeconomic forecasts are "surprised every time" they learn of a new indicator. However, she did not want to finalize the new figures until they could analyze the results as a "whole".
The Spanish gross domestic product (GDP, the indicator that measures the size of an economy) for the first quarter has maintained the good figures of the last three years, as reported this Thursday by the National Statistics Institute (INE). In the first three months of the year, the economy grew by 2.7% compared to the same period last year and by 0.6% compared to the last quarter.
The president of Airef, who spoke at the Summer Course of the Menéndez Pelayo International University and the Association of Economic Information Journalists held this week in Santander, attributed the good data to "the strength of employment, which allows consumption to be maintained at more acceptable levels" despite the "difficult" international context that currently exists, marked by the war in Iran and the blockade of the Strait of Hormuz. Nevertheless, the fiscal authority continues to forecast a progressive slowdown that will place GDP growth at 1.7% by the end of the decade.
Asked whether growth could be hampered if Pedro Sánchez fails to pass the budgets, Olóndriz pointed out that "economic growth in Spain remains important, and this provides tax revenues that allow for the promotion of various policies." However, she reiterated that not having accounts "hinders economic planning."
The Spanish government plans to present next Monday, June 29, the macroeconomic framework that will be the starting point for elaborating budgets for next year, which the executive wants to propose despite the tension between parliamentary groups over corruption cases surrounding the president.
"Measures" will be needed to ensure sustainability
Despite the macroeconomic data, as usual, Airef has annoyed the administrations and warned that, when the new fiscal plan is approved in 2027, "measures" will have to be adopted to ensure the sustainability of current public accounts, given that "the current spending limit will be breached". "Breaching it now means more pressure in the future," he reiterated.
Olóndriz has once again lashed out against Spain's adoption of the new European fiscal framework which he believes is "incomplete" because it does not allow for the differentiation of spending by each level of administration. "We consider that the reform is pending," he stressed.