Comunitat Valenciana and Cataluña, the two autonomous regions that most increased their debt in 2015

Jun - 21
2018

Comunitat Valenciana and Cataluña, the two autonomous regions that most increased their debt in 2015

Comunitat Valenciana and Cataluña, the two autonomous regions that most increased their debt in 2015

  • The whole of the administrations owes 1,070 billion at the end of 2015; accounts for 99% of Spanish GDP, three tenths less than in 2014.
  • The largest increase in debt corresponds to the autonomies (10.3%) followed by the State (4.8%); the town councils reduced their indebtedness.
  • Five communities have borrowed above the average (+1.5 points). The Valencian Community (+2.9) and Catalonia (+2.6) stand out.
  • Brussels warns that the high debt will require “a significant fiscal adjustment”.
 

The indebtedness incurred by the communities in 2015 to finance their excessive deficit has overshadowed the efforts of the rest of the public entities.

The debt of the administrations rose last year to 1,070,279 million euros ( 3.5% more than in 2014) and adds a new annual maximum. However, the increase in economic activity has cut the percentage it represents over GDP by three tenths (up to 99%) and it is also the first annual decrease in this figure since 2008.

It’s a very positive sign , it means that a lot of effort has been made to contain the public deficit,” said deputy finance minister Luis de Guindos, after learning the data published on Tuesday by the Bank of Spain.

The relationship between deficit and debt is closely related. If the administrations spend more than they enter, they have to borrow it and therefore the debt increases. Therefore, the great concern of Brussels with the Spanish economy focuses on the budgetary imbalances of the autonomous communities. Until November, only five (Basque Country, Canary Islands, Balearic Islands, Galicia and Asturias) met the deficit limit of 0.7%.

The mismatch could come from an underfinancing “or simply by waste” “Revenues are quite fixed because they depend on central government funding, that is, the growth of regional debt has been caused by an increase in expenses,” he explains. 20minutos Julián Pérez, deputy director of the Center for Economic Prediction (Ceprede). According to this expert, the mismatch could come from an “underfunding” or simply “through waste”.

And it is here when the view is particularized to each territory. The regional debt grew in 2015 to 261,268 million euros (10.32% more), a historical volume equivalent to 24.2% of its GDP (1.5 points more than in 2014). Neither the State, nor the Municipalities, nor the Social Security, showed last year a greater advance of its indebtedness.

Catalonia and Valencia, the two that increased their debt

No community managed to reduce its debt with respect to the previous year. No community managed to reduce its debt with respect to the previous year. But it is true that in some autonomies grew more than in others and that four of them Catalonia, Valencia, Andalusia and Madrid – account for 66.2% of all regional debt .

The three that present a greater breach of the budget deficit – Murcia, Catalonia and Comunidad Valenciana – are precisely three of those that increased their debt in 2015. The Comunidad Valenciana raised its debt by 2.9 points; Catalonia , 2.6 points; Extremadura , 2.1 points; Aragón , 2 points; and Murcia , 1,8.

Communities % your GDP Debt (Mill €) Variation vs 2104 (Pts%)
Valencian Community 41.3% 41,753 +2.9
Castilla la Mancha 35.5% 13,426 +0.2
Catalonia 35.3% 72,274 +2.6
Balearics 30.4% 8.306 +0.9
Murcia 27.3% 7.601 +1,8
Cantabria 21.8% 2,691 +1,3
Andalusia 21.7% 31,365 +0.8
Estremadura 20.4% 3.576 +2.1
Aragon 20.3% 6,930 +2.0
Castilla y León 19.4% 10,557 +1.5
Galicia 18.5% 10,375 +0.1
Navarre 18.2% 3,322 +0.1
Asturias 18.0% 3.876 +1,3
The Rioja 17.9% 1.436 +1.1
Canary Islands 15.7% 6,649 +0.9
Basque Country 14.4% 9,486 +0.3
Madrid 13.6% 27,646 +1,0
TOTAL 24.2% 261,268 +1.5

As a percentage of its GDP, the Valencian Community , with 41.3%, continues to lead the most indebted regions in relation to its wealth, followed by Castilla-La Mancha , with 35.5%, and Catalonia, with 35%. ,3%. On the other hand, Madrid (13.6%), País Vasco (14.4%) and Canarias (15.7%) have the lowest debt with respect to their economic activity.

Galicia and the Basque Country, which have not held territorial elections in 2015, among the territories that least raised their debt Another curious fact. Galicia and the Basque Country , which have not held territorial elections in 2015 , are among the territories that least raised their debt. The Galician government has only added a tenth to its indebtedness (up to 18.6% of its GDP) while the Basque government has only added three tenths (to 14.4%).

The acting Economy Minister, Luis de Guindos, has asserted on Tuesday that the government “will not drop” any community. “If you let an autonomous community go into a very deteriorated situation, you harm public services, and this is not going to be allowed, ” De Guindos said, a week after the Government of Catalonia asked the government for help in solving its financial problems. short term.

The goal of 60% in 2020, almost impossible

99% of debt in 2015 is the first annual decline since 2008, but it is still far from the 60% that Spain undertook with Brussels to meet in 2020 . “In our horizon we would only reach that 60% between 2035 and 2040 “, explains Julián Pérez, from Ceprede.

Only that 60% would be reached between the year 2035 and 2040 The slight current reductions of the deficit scarcely scratch a few tenths of the debt. And this, according to Pérez, will only be reduced in large percentages if the accounts show a surplus or a “strong policy of selling financial assets” is made, such as the sale of Sareb assets or the sale of the shares in Bankia. “Of course, as long as they are not sold below their purchase value, if sold at a loss, the deficit would be charged,” he adds.

Neither Brussels is optimistic about Spanish indebtedness. In a report issued in January the Community Executive warned that the “high public debt” was one of the factors of vulnerability for our economy and that there was a “40% chance” that by 2020, not only would it not go down to 60% , but would exceed the current 99%.

Triple the debt that before the crisis

And the fact is that the debt figure has almost tripled since the beginning of the crisis. Public administrations owed 383,798 euros in 2007 , an amount that has already risen above one trillion. The cause, the high deficit generated during the crisis that has forced to go to the markets to save the annual budgets of the State and the autonomies.

Most of the debt continues to correspond to the Central Administration (938,799 million), but last year it grew less (4.8%) than the autonomic one. Only local corporations managed to reduce their indebtedness: they cut it by 8.33%, to 35,147 million. And in the case of Social Security , the debt remained stable compared to a year earlier.

Entity Debt (€ million) % GDP Increase vs 2014
State 938,799 86.8% + 4.8%
Communities 261,268 24.2% + 10.3%
City Councils 35,147 3.3% -8.3%
Social Security 17,188 1.6% + 0.0%
TOTAL 1,070,279 99.0% + 3.5%

On the other hand, the Committee on Budgets of the Congress has approved by majority – with the vote against the PP1 that the Secretary of State for Budgets and Expenses, Marta Fernández Currás, and the president of the Independent Authority for Fiscal Responsibility (AiRef), José Luis Escrivá, appear between April 11 and 15 to analyze the public deficit and the high public debt.