The Spanish Government has 76% of Spain’s total public debt, while the Autonomous Community share is “only” 17%

The Autonomous Community public debt has increased 26% in the last 12 months and represents now the historic maximum of 11.4% of Spain’s GDP. Spain’s total public debt reached 63.6% of its GDP and totals 679.8 billion euros. The Catalan Government’s debt has reached 34.3 billion euros, 17.2% of Catalonia’s GDP. It raised 33% in the last 12 months, as the Catalan Government’s public deficit was 3.86% in 2010.

CNA / Gaspar Pericay Coll

June 18, 2011 02:14 PM

Barcelona (ACN).- The Bank of Spain released this Friday data on the public debt corresponding to the first quarter of 2011. As expected, Spain’s public debt has grown, and all public administrations have contributed. At the end of March 2011, Spain’s public debt totalled 679,779 million euros, a 21% increase from 12 months ago. It corresponds to 63.6% of the country’s GDP. With these figures, Spain is surpassing the 60% limit set at the European Stability and Growth Pact for Eurozone Member States, but the country already committed to a budget austerity pluriannual plan that will drastically reduce the deficit in the coming years. The main administration responsible for the public debt’s total is the Spanish Government, which owes 76.6% of it. The Spanish Government’s debt grew by 16.7% in the last 12 months. However, Autonomous Communities are those taking the blame lately because their debt increased by 26% in one year and because of political reasons. Local administrations (municipalities and provincial councils, mainly) are responsible for 37,352 million euros of total debt, 3.5% of Spain’s GDP. In the last 12 months, they issued 3.2% more debt. From all the municipalities, Madrid has more than 7 billion euros of debt and Barcelona 1.1 billion euros. Looking at individual Autonomous Communities, Catalonia is leading the debt ranking in absolute terms. Catalonia reached 34,323 million euros of debt, which represents 28% of the total Autonomous Communities’ debt, when Catalan economy produces 19% of Spain’s GDP. However, in relative terms it comes second with 17.2% of its GDP, while the Valencia Community has debt that represents 17.4% of its GDP.

From Spain’s total public debt of 63.6% of GDP, the Autonomous Community government share only corresponds to 11.4% of the country’s annual production, local governments are responsible for 3.5% and the remaining 48.7% corresponds to the Spanish Government.

Catalonia reaches 34,323 million euros of public debt

Catalonia was already leading the Autonomous Community ranking of public debt last year. At the end of March 2011, it has 34,323 million euros of public debt, 17.2% of the Catalan GDP. Catalonia’s debt has increased by 33% in the last 12 months. A year ago, the Catalan Government’s debt represented 13.2% of GDP. The total debt of all Autonomous Communities is 121,420 million euros. Catalonia’s corresponds to 28% of the share, although its GDP corresponds to 19% of Spain’s GDP. However, the Catalan Government is managing more powers than the average autonomous governments in Spain and it has a larger budget. Catalonia manages key justice and security services, such as police and prisons. In addition, Catalonia suffers each year from a fiscal deficit set at around 9% (depending on the calculation formula), which means that it gives 18 billion euros more than those it gets back (in terms of services provided and investment made) to the rest of Spain in terms of solidarity.

The Valencia Community had 17,895 million euros of debt, which represents 17.4% of its GDP. The Madrid Community, which is a small region around the Spanish capital, performs better, with 14,111 million euros of debt, 7.4% of its GDP. Madrid however has a much smaller need for territorial balance policies (because the region is relatively small and urban) and has the capital city effect, concentrating large corporations that pay taxes there.

The Autonomous Communities are interestedly blamed

The reason for the Autonomous Community debt increase is to be found in a drastic reduction of revenues due to the economic crisis and their limited fiscal capacity –which make them dependant on the will of the Spanish Government. In addition, Autonomous Communities are the administrations that exclusively provide almost all the Welfare State services, services that grow in times of crisis. Therefore, they have limitations while reducing public spending without affecting basic social services. The solution proposed by the European Commission and by the Spanish centralist ideology is to limit the expenditure of the Autonomous Communities, without recognising that in times of crisis the current funding model leaves them with a drastic reduction in revenues and almost no room to implement their own fiscal policy.

If the blame regarding the debt is focused on the Autonomous Communities, the debate is not focused so much on the Spanish Government; this a strategy key for the Spanish Socialist Party of Prime Minister Zapatero. In addition, Spanish nationalism wants to take back devolved powers from the Autonomous Communities, and blame them to undermine their credibility. Spain’s opposition party, the People’s Party, always has good results supporting Spanish nationalism.