Council of Ministers Waives €3.259 Million for the Canary Islands
Approves in Second Round the Forgiveness of Almost €83 Billion of Regional Debt
The Council of Ministers approved on Tuesday, in a second reading, the draft organic law that partially writes off debt for Spain’s autonomous communities. The measure will have the State assume a total of €83.252 billion, equivalent to one‑quarter of the common‑regime regional debt.
The government spokesperson, Pilar Alegría, explained at the press conference following the Council meeting that the central executive has approved the measure in this second round.
The government estimates that regional administrations could save up to €6.7 billion in interest payments, which can now be redirected to strengthen social policies such as health, education, and dependency care.
Andalusia and Catalonia, the Most Benefited
In absolute terms, the regions that will receive the largest write‑offs are:
- Andalusia
- Catalonia
- Valencian Community – €11.210 billion
- Madrid – €8.644 billion
- Castilla‑La Mancha – €4.927 billion
- Galicia – €4.010 billion
- Castilla y León – €3.643 billion
- Murcia – €3.318 billion
- Canary Islands – €3.259 billion
- Aragon – €2.124 billion
- Balearic Islands – €1.741 billion
- Extremadura – €1.718 billion
- Asturias – €1.508 billion
- Cantabria – €809 million
- La Rioja – €448 million
The Basque Country and Navarre are not included in this allocation because they are outside the common‑regime system, although they have already expressed a desire to benefit from a comparable compensation under their foral regimes.
Despite the People’s Party’s outright rejection of the debt reduction, the government has signaled that the regions governed by the “popular” parties will eventually join the scheme.
The administration aims to send the law to the Congress before the end of the year and to achieve definitive approval in the first quarter of 2026.
The Ministry of Finance does not yet have all parliamentary votes secured; some coalition partners, such as Junts, have voiced doubts, arguing that the measure should not be extended to every autonomous community.
Once the law is enacted, the government has indicated that there will be a “sufficiently wide” window for any autonomous community that wishes to opt‑in. This period is necessary for the State to plan the new debt it will assume, identifying the type of debt and the repayment schedules.
Three Phases
The methodology for determining the allocation consists of three phases:
First phase – Calculate the differential between the debt recorded by each autonomous community at the end of 2009 and 2013, and compare it with the differential between the end‑2023 and end‑2019 figures. This yields an average forgiveness of 19 % of the total regional debt as of the end of 2023.
Second phase – Provide an additional write‑off to all communities whose forgiveness rate falls below the 19.3 % average.
“We try to correct that feeling of grievance that autonomous communities may have when they compare themselves with the rest of the territories,” explained Montero.
Third phase – The Treasury makes two equity adjustments:
- Identify the community with the highest per‑capita forgiveness. This is the Valencian Community, with €2,284 per adjusted inhabitant, which becomes the reference figure.
- Raise the forgiveness amount for any community whose per‑capita financing (adjusted for 2010‑2022) is below this reference, so that they receive the same €2,284 per inhabitant.
An additional adjustment rewards communities that have exercised normative competence to increase the IRPF (personal income tax) between 2010‑2022:
- Communities that raised the tax above the average receive an extra 10 % forgiveness.
- Those below the average receive an extra 5 % forgiveness.