Public investment plays a fundamental role in boosting a country's economic growth and competitiveness. In October 2023, the previous Government created the Strategic Investment Committee of the Generalitat of Catalonia to identify, prioritise and plan the financing of the most strategic investments for the country. Given the budgetary pressures faced by the Generalitat, planning investment policy and its financing is absolutely essential.
It should be noted that since 2003, the Generalitat has always run a deficit on its budget, which indicates that annual revenues are not sufficient to cover expenses. This difference, known as the public deficit, reached a maximum of 10 billion euros in 2011 and has been reduced by more than 60% since then.
A relative improvement in the Generalitat's finances has allowed it to make a strong commitment to public investment in the last legislative period. In three years, the investment budget has increased by 50% to reach 3,064 million euros per year. In fact, just to maintain the current stock of public capital in Catalonia – that is, to guarantee the minimum maintenance of roads, schools, hospitals and other infrastructure already built – we calculate that 0.5% of annual GDP should be allocated to investment, the equivalent of some 1,500 million euros. For many years, not even this minimum figure has been reached.
Recently, President Illa presented the Catalunya Lidera Plan, with the aim of mobilising up to 18.5 billion euros in the next five years, a good part of which will be allocated to public investment. These figures give continuity to the investment drive, projecting an annual investment of 3 billion euros over five years and adding the support of the Catalan Institute of Finance (ICF), which, with its lending activity, is around 600 million euros annually.
But beyond the announcements, what must happen for a firm investment policy to become a reality in Catalonia? Three questions are essential:
1- Firstly, there needs to be economic growth, which translates into more income for the Generalitat and this income can be incorporated into a budget and into increasing investment.
Budget extensions are very damaging to investment. Under a budget extension, only the continuity of works already tendered can be guaranteed; new ones cannot be started. Without approved budgets, announcements of future investments will remain a dead letter.
2- Public investment in Catalonia is driven by both the Generalitat and the State. If we analyse the data for the last five years (2019-2023), the degree of compliance with the investments budgeted by the Generalitat has been 87%. This is a good record that contrasts with that of the State, with 51% compliance with the planned investment. This has meant more than 4 billion euros in lost opportunities to improve Catalonia's infrastructure. The investiture agreement between ERC and the PSOE provides for a corrective mechanism from 2024. It must be monitored and its compliance demanded.
3- A final and crucial element is that the cancellation of 20% of the FLA debt is finalised without further delay. This will mean a reduction of 15 billion euros in debt and a saving of around 1.3 billion euros in interest. Overall, this will provide much-needed fiscal space to consider new investments. The Fiscal and Financial Policy Council is scheduled to meet on 26 February, where this issue is expected to be finally finalised.
Finally, it is necessary to implement a new financing model specific to Catalonia, which will begin collecting personal income tax from 2026.
The coming years will be very demanding in terms of investment needs: essential investments in the railway sector, housing, education, energy and water. Catalonia, with 8 million inhabitants, in this complex world of 8 billion people, needs to have infrastructures that are up to the considerable fiscal effort made by its citizens.
I think it is necessary to focus efforts on ensuring compliance with important economic agreements already signed. Compliance with these agreements will, in turn, unlock budgetary agreements and investments. In short, compliance with agreements, budgets and investments. This is the way to ensure greater well-being and prosperity.
