The Valencian Community, Catalonia, Murcia, and Castilla-La Mancha are the most indebted autonomous regions.

The Valencian Community, Catalonia, Murcia, and Castilla-La Mancha are the most indebted autonomous communities, according to a Fedea report published today, which analyzes the evolution of regional debt from 2003 to 2024. The Valencian Community is the most indebted, exceeding 40% of its GDP.

The text notes that all autonomous regions have increased their debt "very substantially" during the previous economic crisis , although it specifies that the differences between them have grown over time in absolute, not relative, terms.

The regions with the lowest debt burden relative to their GDP are the Community of Madrid , the Canary Islands, and the two autonomous communities: Navarre and the Basque Country. Fedea highlights that the debt burden has increased almost 13-fold in Castilla-La Mancha and around 2-fold in Galicia .

Regarding the budget deficit, the report recalls that the State Intervention Office (IGAE) recently indicated that the deficit for all the autonomous communities will have been significantly reduced in 2024 and will stand at 0.12% of national GDP compared to 0.92% the previous year , thus approximately meeting the stability target of 0.1% set last year.

However, the economic think tank suggests that the raw deficit data from recent years are "quite misleading" since the deficits for 2020 and 2021 were primarily due to "an increase in extraordinary state transfers" as a result of the pandemic.

" The disappearance of these transfers, along with the peculiar mechanics of the Regional Financing System (SFA), with advance payments calculated ex ante and settlements made with a two-year delay, help explain the sharp increase in the deficit over the last two years despite the economic recovery," the study explains.

Regarding the 2024 data, Fedea admits that the results are good "but not as good as the raw data suggests and are mainly due to the rapid increase in revenue in a year of robust GDP growth and a very favorable SFA settlement, which corrects a posteriori the low payments on account for 2022."