The Minister of Finance and Public Administration of the Government of Castile-La Mancha, Juan Alfonso Ruiz Molinaassured that the pre-agreement between the PSC and the ERC to transfer to Catalonia the management of one hundred percent of its revenues will not come to fruition because it is unconstitutional.
At a press conference to present the spending ceiling that the Executive of Castilla-La Mancha estimates for 2025, he joked that if the government’s strategy in the Catalan region went ahead, the Fiscal and Financial Policy Councils would ask to summon the new Minister of Economy of the Government of Salvador Illa“because it will be Catalonia that decides how much money the others will have.”
Ruiz Molina stressed the need to reform the autonomous financing system in a negotiation where “all the autonomous communities” participate and without allowing “privileges”as his judgment implies the “concert” agreed in Catalonia.
Castilla-La Mancha will continue to request a transitional fund for the underfunded autonomous communities – Valencia, Andalusia, Murcia and its own – which it considers possible and which it estimates at 3 billion euros for all these autonomies.
As you pointed out, Castilla-La Mancha rejects “Let Catalonia decide what level of resources the other autonomous communities should have”; since according to the pre-agreement with the PSC, it will be this region which will “decide” what each region will receive.
“The CPFF will have to be convened by the Minister of Catalonia because it will be Catalonia that will decide on the money that the rest of the autonomous communities will have, although I am of the opinion that this agreement will not be achieved because it is an attack on the principle of equality established by the Constitution, both active and passive,” he stressed.
On the other hand, the Government of Castilla-La Mancha has approved the limit on non-financial expenditure for the year 2025, for an amount of 8.315 million euros, 4.5 percent more than in 2024. An increase that is made taking advantage of the political stability that the region enjoys and will allow us to “provide ourselves with the main instrument that the regional government has to fulfill the commitments acquired with citizens”, said the Minister of Finance, Public Administration and Digital Transformation, Juan Alfonso. who stressed that Castilla-La Mancha is one of the first autonomous communities to give this approval.
Once approved, this limit on non-financial expenditures, also known as the spending ceiling, will be immediately transferred to the regional courts, thus beginning the mandatory parliamentary process to approve the draft finance law for 2025, with the aim that they can enter into force on January 1 and comply with the priority of “continuing the fair and united redistribution of the wealth generated, which allows improving the quality of life and well-being and making them compatible with the economic development of our region.”
Main sizes
Ruiz Molina explained that this spending ceiling was developed taking into account the resources from the financing system, officially communicated by the Ministry of Finance at the end of last month, as well as the budgetary stability objectives, approved at the last Political Council Fiscal and Financial Meeting held on July 15 and whose deficit of 0.1 percent was approved by the Council of Ministers and not approved in the Congress of Deputies by the Popular Party, Vox and Junts.
In this regard, the councilor urged the Castilian-La Mancha political forces (PP and VOX) with national representation, to support this deficit target in a new vote, the date of which is not yet known, because if this is not done “It would mean for Castilla-La Mancha a reduction in our economic capacity of just over 100 million euros.”
Ruiz Molina also detailed each of the components of this spending ceiling for 2025. The first of these is the own non-financial income, which amounts to 8.247 million euros, varying by 4.6 cents compared to the previous year. Of this figure, 88 percent, or 7.257 million, are the income that corresponds to Castilla-La Mancha of the current financing system.
This high percentage, according to Ruiz Molina, “shows the importance for the region to urgently address the reform of the regional financing system”, which is why he expressed the “absolute rejection” that the government of Castilla-La Mancha has expressed. the agreement between the PSC and the ERC, approved by the Spanish government, and which establishes an economic agreement between the Generalitat and the State to invest Salvador Illa as president of Catalonia, being “a blatant attack on the principle of equality that “is recognized in the Constitution.”
Likewise, the remaining twelve percent, or 990 million, “correspond to the tax revenues that we manage from the Regional Administration and those coming from other administrations, such as the State or the European Union”, an estimate made “with the greatest caution”.
The second component is the deficit allowed for the next financial year. As agreed at the Fiscal and Financial Policy Council last July, “this represents 0.1 percent of the regional GDP, which is approximately 55 million euros”, which, although it was rejected along with the spending ceiling for 2025, will be the indicator that the Regional Executive will use to prepare the regional budget.
The last amount concerns the adjustments to national accounting, which total 12.3 million euros, and which are those that must be made so that the expenditure ceiling is set in terms of national accounting.
A positive scenario
According to the advisor, this is a limit on non-financial expenditure that has been developed within the framework of a very positive macroeconomic scenario, both for Spain and the region, reflected in the reports of the main studies that estimate a sustained growth of the regional economy, both in 2024 and 2025.
To this must be added the control of inflation, which, according to the latest records for the month of July in the region, is 2.6 percent, below the national average. This means that 2024 will end with a GDP increase of 2.3 percent, supported mainly by variables such as employment, foreign investment, export growth or business creation data.
Regarding the forecasts that the regional government has prepared for 2025, approved by the Independent Authority for Fiscal Responsibility (AIReF), the councilor assured that they have been prepared with “great caution” and show a growth, in real terms, of 2 percent, a percentage much lower than that estimated by the most reputable research services, such as BBVA, Hispalik and Cepredes.
An attitude with which the Executive has developed this spending ceiling, maintaining the region’s debt level at the limits that had been recorded since the approval of the first budget in 2016, and which has allowed, according to Ruiz Molina, “to be” the third community that has most reduced the weight of its debt in relation to GDP.
Finally, the advisor explained that this ceiling on non-financial expenditure will allow the preparation of regional budgets for 2025, whose priorities will be to strengthen the protection of services linked to the welfare state, to stimulate economic activity and employment in the region; to accelerate the ecological transition and the digital transformation, by effectively implementing the allocated European recovery funds and by adopting active policies to address the demographic challenge.
