Spain’s minority coalition government led by the PSOE socialists and left-wing Sumar group announced on Monday its intention to cancel €83.2 billion in debt accumulated by regional administrations during the 2008 financial crisis.
Budget Minister María Jesús Montero (main image) explained that the proposal, which requires parliamentary approval, would apply to all 17 autonomous regions of Spain. These regions, under the country’s highly decentralised governance system, are responsible for managing essential public services such as health care and education.
This initiative aims to lower the regions’ debt burdens and ‘clean up’ their financial records, enabling them to ‘finance themselves more easily on the markets’, Montero said during a press conference.
According to Montero, the plan recognises that the response of the right-wing People’s Party (PP), which was in power during the financial crisis, ‘was not adequate and led to a significant deterioration in the accounts’ of regional governments.
Of the total debt to be written off, €17.1 billion pertains to Catalonia, as reported by the Catalan pro-independence party Esquerra Republicana (ERC), which has consistently advocated for this debt to be erased.
‘We have gone a little further than originally planned,’ said ERC leader Oriol Junqueras.
In 2023, Spain’s governing PSOE had already agreed to cancel 15 billion euros of Catalonia’s debt under a deal with ERC. This debt was accumulated through a special fund created during the 2008 financial crisis to assist cash-strapped regional governments. However, following opposition from other regions, the government decided to extend the debt relief to all regions that had accessed the fund.
While the right-wing opposition has declared it will vote against the measure, the proposal is expected to pass with support from several smaller regional parties that back the coalition government.
Spain’s total public debt decreased to 101.8% of GDP by the end of 2024, down from 105.1% at the close of 2023. That is lower than the government target of a ratio of 102.5%.
La ministra de Hacienda @mjmonteroc anuncia que el Estado condonará 83.252 millones de euros de deuda a las Comunidades Autónomas
Se pretende corregir el sobreendeudamiento al que se vieron abocadas las CCAA durante la crisis financierahttps://t.co/CBH0onAgvc pic.twitter.com/pTs8HL9yCU
— Ministerio de Hacienda (@Haciendagob) February 24, 2025
▶️El Gobierno condonará 83.252 M€ de deuda a las CC.AA.
Una medida sin precedentes que beneficia a todas las comunidades en régimen común para:
✅Corregir el sobreendeudamiento
✅Destinar más recursos a servicios públicos
✅Ganar autonomía financierahttps://t.co/mBOL7I057b pic.twitter.com/BDH3agPWv6— La Moncloa (@desdelamoncloa) February 25, 2025
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