THE Galicia’s financial charges in interest on its debt public They would reach 503 million euros in 2027, almost five times more than the 102 million in 2022, if they issued new debt to finance the maturities of what is currently in circulation and the expected deficit, according to estimates by the Foundation for Economic Studies. Applied (Fedea) based on official forecasts and a series of conservative assumptions.
Fedea takes as a reference for these projections nominal GDP growth forecasts and public deficit reference targets of the communities included in the “Spanish Economic Situation Report 2024”, the average life and conditions of the public debt currently in circulation, and the interest rates in force since 2015.
Thus, the average rate of the public debt of the Galician Community, defined as the quotient between the annual payment of interests and the stock of public debt at the end of the year, will reach 3.9% in 2027, compared to 0.9% in 2022. Regarding the increase in the average tariff from 2022 to 2027 in Galicia, it will be three points.
In general, according to the study, the financial expenditure of the autonomies in interest on their public debt would be close to 12 billion euros in 2027more than triple the 3.608 million euros of 2022.
Going deeper, Fedea would accept, in its projections, that the Autonomous Communities reach the reference targets of the new deficit trajectory established by the Government (0.1% for the years 2025-2027). By 2024, the institution assumes that the Autonomous Communities will close with a deficit of 0.3%the percentage predicted by AIReF (AIReF, 2024).
The work, prepared by Fedea researchers Manuel Díaz and Carmen Marín, recalls that the autonomous communities must undertake a process of budgetary consolidation in the coming months to comply with the newly agreed budgetary rules within the European Union.
Estimates
Everything indicates that in the medium term, if no further reforms are undertaken, the requirements set out in the Organic Law on Budgetary Stability and Financial Viability will be resumed, according to which the autonomous regions must achieve the following: budget balance in structural terms.
The institution estimates that the volume of absolute public debt will increase by 28,351 million between 2022 and 2027, due to the increase in the level of debt observed between 2023 and 2022 (8.145 million euros) and the need to finance the projected deficit in 2024 as well as the outstanding deficits from previous years (11,353 million).
Another cause is attributed to payment of 2008 and 2009 compensation postponed for twenty years (3,774 million) and the need to finance the projected deficits between 2025 and 2027 (5,079 million). This would give rise to a public debt of 345,440 million euros in 2027.
However, if we consider the public debt as a percentage of GDP, we observe a reduction of 4.3 points, which is explained by the increase in GDP forecast by the Ministry of Economy and Competitiveness. Therefore, The debt/GDP ratio would decrease in 2027 to 19.6% from 23.9% of 2022.
Region that spends the most
According to Fedea’s calculations, Catalonia This would be the region that would devote the greatest financial expenditure to interests in 2027, almost 3 billion euros, almost three times more than in 2022 and double that of Madrid, for which an expenditure related to interests is estimated at 1.586 million, double that of Madrid. of Madrid in 2022.
According to Fedea, the average rate of regional public debt will reach 3.4% in 2026, compared to 1.1% in 2022. The increase in the average debt rate will be greater in communities where part of their debt is in the hands of the State through the Autonomous Liquidity and Financial Facility Fund than in those that are not financed by these extraordinary mechanisms. (Navarre, Basque Country and Madrid)).
