The Prime Minister began his political journey on Wednesday with a strong message, seeking to calm criticism of Catalonia’s special funding. He promised that, in the new system, the interterritorial compensation fund would be doubled and that more resources would be guaranteed to all communities compared to the time of Mariano Rajoy.
The Interterritorial Compensation Fund, whose resources were reduced by a third after the great crisis, had a provision of 432 million euros in 2023plus an additional 115 million in unexecuted balances from previous years, according to data from the Ministry of Finance. This figure is similar to that of 2021 and slightly higher than the 324 million euros allocated in 2020.
Interterritorial compensation funds thus reached 547 million euros last year. If the government continues its projects and doubles this amount, we will be talking about exceeding the 1,000 million euros. But of course, according to the point of view of some economists, this sum would remain “insignificant”. The impact of the measure will be practically zero, since these resources represent only 0.3% of all funding available to the territories. And where does this percentage come from? We must look at the Fundamental Public Services Guarantee Fund, which is the main pillar of the financing model, which exceeded 113 billion euros in 2022. Added to this are other smaller funds, with a total of almost 124 billion in resources.
Although Sánchez’s goal was to divert attention from the debate on the Catalan concert by proposing an increase in funding for each baron, the reality is that oil has been added to the fire. And that’s it The data show that equalising compensation for all autonomous communities at the Catalan level would require expenditure equivalent to two points of GDP, or around 30 billion euros. This amount is comparable to the total deficit of the pension system and could lead the Spanish public debt to a state of unsustainability and possible non-payment.
In addition, These 1,000 million that would be doubled would barely cover a fifth of the current net contribution of the Generalitat to the territorial rebalancing. Similarly, doubling this amount would also increase the contribution of provincial treasuries to interterritorial solidarity, although to a very moderate extent.
Criticism of the opposition
The Popular Party has harshly criticized the government’s commitment. The PP’s economic spokesman, Juan Bravo, called the measure “derision” in an interview, and the president of the party, Alberto Núñez Feijóo, stressed on the social network let the Spanish “live on the leftovers” after its agreements with the independence movement.
Feijóo said that the Interterritorial Compensation Fund is not part of the regional financing system and that it is an insufficient measure. He called the fund an “insulting” solution for regions that he considers second class. Feijóo accuses Sánchez of having a “banana vision” of institutions and use official acts to attack the autonomous communities, which presents him as a bad manager. In addition, he considered that Sánchez was trying to silence critics with less than 450 million euros, when he had already spoken of the need for 16 billion euros.
For his part, Fedea proposed the creation of a temporary equalization fund to reduce regional funding disparities between regions. According to its estimates, Autonomies with fewer resources would need 3.277 million euros to reach the average income per capita in Spain, which is four times more than the amount suggested by Pedro Sánchez.
In 2023, Andalusia was the community that benefited the most in absolute terms from the Interterritorial Compensation Fund, receiving 160 million euros, which represents 37% of the total. They followed it Canary Islands with 62 million, Valence with 53 million and Galicia with 38 million. According to estimates from the think tank, The impact of the Catalan concert will be between 6,600 and 13,200 million euros, which is equivalent to 30 to 60% of the alleged tax plunder. which the Catalan secessionists have denounced.
These resources, intended to promote solidarity and established by the Constitution, are intended to benefit communities whose per capita income is less than 75% of the European Union average. In practice, only the communities of Madrid, Catalonia, the Balearic Islands, Aragon, the Basque Country, Navarre and La Rioja do not have access to them.
