The regional debt write-off comes more than a decade after the bailout was launched

It was in the summer of 2012 when the PP Government launched the rescue mechanism for the autonomous communities with the Autonomous Liquidity Fund (FLA). It was a time when the communities had serious problems financing themselves in the market. Catalonia began by asking for more than 5,000 million. Yesterday, the Ministry of Finance laid the groundwork for forgiving 83,252 million euros to all the autonomous communities, whether they are part of the FLA or not. In the case of Catalonia, 17,104 million are forgiven.

The mechanism designed takes into account several conditions to calculate the amount corresponding to each autonomous region.

How is the amount to be forgiven calculated?

It is estimated by comparison. The increase in regional debt between December 31, 2009 and December 31, 2013 is calculated with the increase over the same time period (four years) but at a different time: between December 31, 2019 and December 31, 2023. From this calculation it is estimated that in the first period that coincides with the financial crisis, the increase in debt was 80.31 billion.

How is it distributed by communities?

The majority (75%) is distributed based on the population of each community, but not as it appears in the census, but rather “adjusted” by a series of parameters such as insularity, dispersion and others.

How much of the debt is forgiven?

At least 19% of the total debt of each community. In the case of communities where the debt forgiveness does not reach 19%, it is raised to that minimum. In this way, the amount of debt to be forgiven increases by an additional 11,514 million. Half of this amount corresponds to Catalonia. Valencia is the other community that benefits the most from setting a minimum percentage of debt to be forgiven.

Is the financing model taken into account?

Partially. It is estimated which community has the most debt forgiveness per inhabitant and it is raised to that amount for communities that have had below-average regional financing. This mechanism is an additional 10.59 billion, which especially benefits Andalusia.

What about fiscal policy?

Partially, too, since those communities that have exercised their powers by raising taxes with the aim of recognizing the “fiscal effort” of the communities will receive greater forgiveness. In this way, the amount increases by another 917 million.