The government’s objective is to cancel more than 83 billion euros of debt to the autonomous communities, within the agreement that the PSOE reached with the ERC in exchange for their votes to invest Pedro Sánchez in November 2023. The Executive expects the regions to save 6.7 billion euros in interest. And that they have better access to markets.
When developing the corresponding standard, The Treasury had planned to individualize the debt tranches to be canceledin agreement with regional governments. However, María Jesús Montero ultimately decided to generalize the way in which the discount will be applied and resort to a sort of coffee for everyone Given the problems that this formula posed.
It should be remembered that the majority of public debt contracted by the regions is with the State, notably through the Autonomous Liquidity Fund (FLA).
As Treasury explains, the state will assume this debt “by canceling or amortizing outstanding loan balances with the FLA until the amount allocated to said community is reached.”
“This will start with the oldest loans up to 2019“, and may be canceled or written off in full.
From there, and if the corresponding autonomy still had room for tolerance, This would start with 2024 quantities. “Then this would move to 2023, 2022, 2021 and 2020, successively and if necessary,” they add.
This is the general formula that had to be established before the refusal of the Autonomous Popular Party (the majority) to negotiate with María Jesús Montero’s team the sections to which tolerance would apply.
On the other hand, in the event that the regions do not have any debt with the State (like Madrid), “they will be asked to transfer to the General Secretariat of the Treasury and International Financing the data from your debt portfolio with third parties“.
After having selected the operations that could be part of the cancellation, “the Delegated Commission of the Government for Economic Affairs (CDGAE) will agree that the State subrogates the debtor position of these autonomy”. Yes indeed: This will require the “prior consent of creditors”, from private markets.
The controversial measure arose from the aforementioned agreement between the PSOE and the ERC. The State would cancel 25% of the debt of the Generalitat of Catalonia to the State in exchange for the support of the Catalan Republicans with their votes for the inauguration of Pedro Sánchez in November 2023, which was the case.
Finally, the measure was extended to all autonomy. The bill begins a parliamentary journey in which it may undergo modifications, just as they admit sources close to the text.
In this sense, Junts has already approved the measure. But Carles Puigdemont’s men will surely demand theirs brush strokes in the text.
The Treasury believes, however, that the legislative process will be overcome. And that all regions will participate in the cancellation of the debt. An initiative which, moreover, It will be managed in parallel with the State General Budget project and new regional funding..
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