Sánchez will forgive 83.2 billion euros of the debt to the communities, 17 billion in Catalonia

Barcelona / MadridThe Spanish government will forgive part of the debt of the regional liquidity fund (FLA) to several autonomous communities, a total of 83,252 million euros, 17,104 of them in Catalonia. The president of ERC, Oriol Junqueras, announced this figure shortly before the appearance in Madrid of the Minister of Finance, María Jesús Montero, who stressed that the measure initially agreed with the Republicans for the investiture of Pedro Sánchez extends to other territories. This Wednesday it will be validated in the Council of Fiscal and Financial Policy (CPFF) and subsequently it must be approved in the Congress of Deputies. The decision, which comes a year after it was agreed, puts the PP to the test because it is a measure that it has rejected, except for the Valencian Community.

"All communities benefit [except Euskadi and Navarra, which have their own model], whether or not they have a debt with the FLA," Montero stressed in a press conference, which she estimated at between 5,000 and 7,000 million euros the communities would save in paying interest in the coming years. The Minister of Finance wanted to dismantle the accusations about territorial "grievances." Andalusia, where Montero will run in next year's elections, heads the list, with a forgiveness of 18,791 million; in second place would be Catalonia; in third place the Valencian Community, with 11,210 million, and in fourth place the Community of Madrid, with 8,644. "If the PP votes against it, there is no other explanation than that it always puts the false story of comparative grievance before the interest of the citizens they govern," she added. And the first criticisms have already arrived from the PP, which speaks of "blackmail."

"The PP wants to talk about funding, not about how much the support of the independence movement costs so that Sánchez can remain in the Spanish government for a few more months. The PP presidents will vote against inequality, against allowing mismanagement, against privileges and against the purchase of the Spanish government with cash payments to the independentists with money from all Spaniards," she said. The new organic law that is drawn up must be approved by an absolute majority in the lower house, so it could go ahead without the PP. Once it has passed all the formalities – the minister has calculated that at the end of the year, taking into account that a preliminary draft with public consultation and mandatory reports is necessary – the communities can join voluntarily.

Satisfaction for ERC

The agreement between PSOE and ERC established the forgiveness of "around 15,000" million euros corresponding to the FLA debt, which meant forgiving "around 20%" of the total debt of the Generalitat. at the time the agreement was signed, on November 2, 2023. According to Junqueras, the Republican leadership has now gone "beyond what was expected" because it has reached 17 billion euros, which represents 19.9% of the Generalitat's overall debt, but 22% of the FLA's debt. With this agreement, the Republican leader argues that what was agreed is materialized and the PSOE has been forced to "fulfill what it signed." According to ERC's calculations, the forgiveness of this debt represents 2,300 euros per capita and is equivalent to the investment that the Generalitat can allocate to hospitals, institutes or research centers.

Despite this advance, ERC maintains its opposition to negotiating this year's budgets in Catalonia and also in the State - although on Saturday Junqueras opened the door to talk about those of 2026–, but the Republican president has shown himself willing to negotiate the credit extensions that the Government needs, valued at 4,000 million euros. The other leg of the agreements between ERC and the PSOE is the new financing model, which should be finalized in the first semester, although it will not be addressed in the Bilateral Commission this Monday. It could be discussed at the meeting of the Joint Commission on Economic and Fiscal Affairs scheduled for this Friday in Barcelona. For the moment, the Spanish government is not coming to the CPFF empty-handed or with the new financing model as the only matter on the table, so it passes the ball to the PP.

What is the methodology?

Montero explained that a methodology with objective criteria has been developed to avoid territorial grievances. Firstly, the over-indebtedness of the communities as a result of the PP's management during the financial crisis (2010-2013) has been calculated. During that period, the regional debt reached 109,582 million, while during the pandemic crisis, between 2020 and 2023, it was 29,272 million. The difference between both figures is 80,310 million of over-indebtedness and this is what the Spanish government is prepared to forgive. Firstly, 75% of that figure – 60,232 million – is distributed based on the adjusted population.

From there, with the remaining 25%, the ministry has established corrections. In phase 2, in the communities that are below the average – 19.3% – the tax write-off is increased until reaching it. This is especially beneficial for the communities with the highest debt, such as Catalonia and the Valencian Community. In phase 3, the highest tax write-off per adjusted inhabitant is established as a reference, which is that of the Valencian Country with 2,284 euros, raising the tax write-off to this level for underfunded territories. Andalusia is the one that benefits the most from this correction. In this same phase 3, in addition, an additional compensation is added to the communities that have made an effort not to lower the IRPF and, therefore, have not renounced collecting resources. That is why the total amount of debt assumed by the State increases to 83,252 million.