Fedea denounces that debt relief favours Catalonia and harms Murcia, Andalusia and Valencia

The mechanism for distributing debt relief to the autonomous communities does not compensate for the underfunding that Andalusia, Murcia and the Valencian Community have been dragging along for years. Fedea calculates that the debt relief proposed for these three regions continues to generate a deficit in the receipt of funds of 39.2% for the region governed by Carlos Mazón, 34.5% for the one led by Fernando López Miras, and 15.3% for the one led by Juanma Moreno. "The distribution proposed by the Treasury takes into account the underfunding, but in a peculiar way, since the premium for this concept does not necessarily reflect the magnitude of the problem, that is, the accumulated underfunding suffered by each community," states the report signed by the director of the entity, Ángel de la Fuente. On the contrary, the document warns that the Executive especially favours Catalonia , which receives 87% more , recognising a greater underfunding than the rest.

This is not the only point of the proposed system that raises doubts for the think tank . Fedea criticises the fact that the Treasury does not accompany the reductions with "strict adjustment conditions" that promote the fulfilment of fiscal objectives. "It will tend to confirm the perception that the Autonomous Communities already have that they can systematically spend more than they earn because in the end the State will rescue them in one way or another at no cost to them and therefore constitutes an invitation to fiscal indiscipline," the study points out.

In fact, de la Fuente warns of the precedent that this mechanism will set in future financial shocks. The expert believes that the adoption of a "rescue" will eliminate any temptation that communities might have to save something for bad times and will also increase state spending. "Given the incentives for fiscal irresponsibility, the proposal is difficult to overcome," he warns.

On the other hand, the report takes aim at the criteria used by Montero's party when implementing the reductions . It denounces the fact that over-indebtedness during the last financial crisis was given priority as a pattern for establishing the distribution. De la Fuente affirms that this penalises the good management of those regions that did not increase their liabilities with the State by applying spending or income adjustments during the years of the recession. Instead, he considers that it would have been more "reasonable" to distribute the aid in proportion to the adjusted population.

He also criticised the fact that the total amount of underfunding accumulated by four autonomous communities during the current model of regional funding has not been taken into account. "The premium for this concept does not necessarily reflect the magnitude of the problem, that is, the accumulated underfunding suffered by each community," he added.

Finally, the think tank criticises the fact that the Treasury has decided to separate the roll-out of the debt forgiveness of the autonomous communities with the FLA from the negotiation on the reform of the financing system. Its opinion supports the argument that the PP barons have not stopped repeating during the last few hours to reject the proposal that will be debated and voted on this afternoon within the Fiscal and Financial Policy Council (CPFF) . "First we ask for a proposal to reform the financing system, and while it is being reformed, that a transitional equalisation fund be created to compensate for this under-financing. Then if there is a need to go to a debt forgiveness, it will be studied," claimed the Andalusian councillor, Carolina España, in a recent interview with elEconomista.es .