The Spanish Government announced on Monday that it intends to cancel €83.2 billion of debt owed by the regions following the 2008 financial crisis, as part of an “unprecedented effort” to “clean up” their accounts.
A proposal to that effect will be put to a vote by the regions on Wednesday before being debated in the Congress of Deputies. It “will benefit all Autonomous Communities (the term for Spain's regions),” Budget Minister María Jesús Montero said at a press conference.
The regions will be able to “reduce their debt ratio” and “clean up” their accounts, allowing them to “finance themselves in the markets more easily,” added the Socialist minister, who is the second in command in Pedro Sánchez’s government.
For the executive, this is a way to “acknowledge that the response made during the financial crisis by the Spanish government,” then led by the right-wing Popular Party (PP), “was inadequate and led to significant deterioration of regional accounts,” Montero emphasised.
According to the Catalan independence party ERC (Republican Left of Catalonia), which has long called for the cancellation of this debt - incurred due to a drop in tax revenues during the crisis - €17.1 billion of the €83.2 billion will benefit Catalonia.
The debt of all Spanish public administrations (State, social security agencies, and local authorities) stood at €1.622 trillion at the end of 2024, equivalent to 101.8% of GDP, according to the Bank of Spain.
This ratio is better than the government’s target, which had aimed to reduce it to 102.5%, down from 105.1% at the end of 2023.
