The Ministry of Finance held a meeting of the Policy and Fiscal Council (CPFF) at noon next Monday, the body that brings together government and communities. The goal of the administration run by María Jesús Montero through the meeting is to make the autonomous regions aware of its proposal to distribute the deficit between the different public administrations, and thus to exchange views on the state of regional financing and its possible reform. The appointment is one of the previous and essential steps before the executive authority in the Council of Ministers approves the spending ceiling and the financial path, which are the two pillars upon which the preparation of the state’s general budget for the year 2026 is based.
According to sources from the treasury and municipalities, the meeting will address the ministry’s proposal regarding the goals of stabilizing the budget and public debt of the autonomous regions in the period 2026-2028. The agenda also includes an update on the status of reform of the regional financing system, although sources from the ministry confirm that there will be no closed proposal.
With this call, the Treasury seeks to expedite a budget process that has been accumulating apparent delays with respect to the statutory calendar. The constitution requires the draft accounts to be submitted before October 1, but for the third year in a row the government misses the deadline, opening the door to a possible new extension of the 2023 accounts, which is the last to see the light.
The distribution of the deficit is a particularly sensitive issue for both the central executive and regional governments, most of which is in the hands of the People’s Party. Every year, the four subsectors that make up public administration – central administration, autonomous communities, local entities, and social security – have to adhere to fiscal limits that together constitute the state deficit.
Last year, in the 2025-2027 pathway, Treasury proposed a distribution giving an imbalance of 2.2%, 1.8% and 1.5% to central management for each of the three years. Social Security is allocated a deficit of 0.2% each year, while the deficit in autonomous communities can be as high as 0.1%. To solve this problem, local entities must move toward balanced budgets or zero deficits. The target was to achieve combined red numbers of 2.5%, 2.1% and 1.8% of GDP, respectively. Subsequently, the proposal was not voted on in Congress, where the People’s Party, Vox and Gents formed a common front for different reasons.
On paper, the government has the upper hand in the CPFF, because the Treasury only needs to vote in favor of at least autonomy to implement its proposal, regardless of what happens next in the Cortes. However, the meeting is supposed to be tense due to the expected rejection from the PP communities and the precedent they set months ago, when Minister Montero stood up at the last meeting and called for discussion of the partial reduction of the regional debt.
About The Author
