Canary Islands seek decree to suspend fiscal rules and tap treasury surplus

“We are in that open conversation, we are awaiting a formal meeting with the State Government.”

The President of the Canary Islands Government, Fernando Clavijo, has sent a letter to Treasury Minister Arcadi España, backed by the Canary Islands Federation of Islands (FECAI), asking for a royal decree‑law that would temporarily suspend the fiscal rules governing the archipelago and allow the unrestricted use of treasury surpluses.

Why the measure is being proposed

Regional government spokesperson Alfonso Cabello explained in a press conference that the proposal “is not a madness” given the limited fiscal space that Canary administrations have to react to the global shock caused by the war in the Middle East. He pointed out that the EU’s “safeguard clause” permits member states to flexibilize fiscal rules when exceptional circumstances arise that could have “significant repercussions” on public finances—an option that fits the Canary Islands’ status as an ultra‑peripheral region.

Cabello criticized the arguments presented by Economy Minister Carlos Cuerpo for rejecting the proposal, saying they “do not match” the islands’ situation. He recalled the success of a decade‑old agreement on the former IGTE, which turned €1.6 billion of funding into a €4.5 billion impact thanks to the Canary Development Fund (FDCAN).

Expected financial impact

In a context of global recession and rising prices, the regional government sees the need to either tap the treasury surplus or relax the spending rule—both options allowed under EU law. If the Canary Islands were permitted to borrow up to 13 % of GDP, the measure could unlock up to €1.6 billion in additional financing.

Cabello admitted that it is “very difficult” to calculate the exact impact of the war, but it is “obvious” that higher fuel prices, an increased cost of the consumer basket, and a “slow‑down” in certain investment decisions are already being felt. He noted that a European Union representative this week warned that the consequences “were going to be catastrophic.”

Status of the “Decreto Canarias”

Regarding negotiations on the so‑called “Decreto Canarias,” which aims to meet the objectives of the “Canary agenda” and budgetary commitments, Cabello said progress is being made on issues where there is consensus, while other points remain “in doubt” and some will be postponed to a “second stage.”

“We are in that open conversation, we are awaiting a formal meeting with the State Government; the request has just been sent to Minister Arcadi España and that is the direction we will follow,” he added.