The search for support by the PSOE to support a future investiture of Pedro Sánchez as President of the Government has revived the debate on regional financing. This is a matter repeatedly claimed by the nationalist parties of Catalonia, decisive after 23-J for the formation of government. The community chaired by Pere Aragonès is the one with the highest volume of public debt, although no region escapes debt.
According to data from the Bank of Spain —referring to the first quarter of 2023—, Catalonia is the autonomous community that accumulates the highest public debt. The amount amounts to 85,456 million euros, which represents 33% of the Catalan GDP. Measured over the total wealth of the region, the proportion of public debt of the Valencian Community exceeds that of its neighboring community, since it amounts to 43.7% of GDP, standing at 55,439 million euros.
These two communities are the ones that have traditionally been most critical of the regional financing system, which is why the Catalan forces have introduced the debate on the matter in the negotiations to form a government. In fact, the day after the elections on July 23, ERC already included among its conditions to support an investiture by Pedro Sánchez addressing the fiscal deficit, a demand that the president of the Generalitat, Pere Aragonès, repeated this Tuesday.
Despite being the most indebted, Catalonia is the community that allocates the most resources to social spending and the second that invests the most money in education and health. In total, these items concentrate 59.3% of the regional budget for 2023. However, looking back, the Generalitat's budget management has been dotted with convictions for embezzlement of leaders such as Oriol Junqueras, Raül Romeva, Jordi Turull and Dolors Bassa, for the illicit use of public funds during the process.
a shared problem
Public debt is not only a problem in Catalonia, but is shared by all communities. Catalonia and the Valencian Community are the only ones where the amount owed exceeds the barrier of 50,000 million euros, although also in Castilla-La Mancha and Murcia the debt exceeds 30% of the regional GDP, with 15,574 million and 11,506 million euros respectively. In addition, in half a dozen communities the ratio of debt to regional wealth is between 20% and 26% of GDP. This is the case of the Balearic Islands (26.1%), Extremadura (22.7%), Cantabria (21.6%), Aragón (21.3%), Andalucía (20.3%) and Castilla y León (20, 3%).
The regions in which the public debt is less bulky are La Rioja, Navarra, Cantabria and Asturias, with 1,652, 3,102, 3,375 and 4,212 million euros respectively. Beyond the total amount, the measurement of debt as a percentage of GDP better reflects the ability of the community in question to face that amount. For example, both the Basque Country and Murcia are close to 11,500 million euros in public debt, a volume that in the first case represents 14.1% of Basque GDP and, in the second, 31.7% of Murcia's GDP.
Thus, the communities with the lowest debt over GDP are Navarra (13.5%), the Basque Country (14.1%), the Community of Madrid (14.2%) and the Canary Islands (14.9%).. According to the forecasts of the Independent Authority for Fiscal Responsibility (AIReF), these regions will remain at the tail end of indebtedness throughout 2023, since the fiscal supervisor expects all of them to make progress in cleaning up their public finances until they reduce the debt for below 13% of GDP. When comparing the autonomous communities, it must be taken into account that the Basque Country and Navarra have a special financing regime, in which they receive a pre-fixed amount from the State, while the rest of the communities receive a proportional part of the tax collection , compensated with other additional transfers.
Public deficit
Beyond the debt, Catalonia is also the community with the largest public deficit, according to the latest data from the General State Intervention (IGAE), referring to the month of May. The Catalan accounts present a mismatch of 1,380 million euros. However, the region chaired by Aragónès is the second in which the most wealth is produced, only behind Madrid, so that said deficit barely represents 0.52% of GDP.
There are six autonomous communities that exceed the deficit level of Catalonia. At the head are the Balearic Islands, Murcia and Extremadura, where the indicator stands at 1.52%, 0.88% and 0.92% of GDP respectively. In the Valencian Community, Navarra and Castilla-La Mancha, the deficit also exceeds 0.5% of GDP, with budget imbalances of 1,039, 185 and 302 million euros respectively.
For its part, the public deficit is below 0.5% of GDP in the Community of Madrid (-0.47%), Cantabria (-0.40%), Aragón (-0.32%), Galicia (-0.3%), the Canary Islands (-0.26%), Castilla y León (-0.18%), La Rioja (-0.16%) and Andalusia (-0.14%). Only the Basque Country and Asturias closed the month of May with a surplus, an achievement that AIReF expects that the Balearic Islands, Canary Islands, Galicia and Navarra will also achieve throughout the year.
