Spain | Regional Government debt

The crises of the last fifteen years have resulted in a sharp increase in regional debt, which has also conditioned its structure. The FLA provided access to financing at a time when the markets were closed on very favourable terms, and has become the main financing instrument for Regional Governments.

Key points

• Key points:
• At the end of 2022, debt reached an all-time high of more than 316.8 billion euros, representing 23.9% of GDP. Currently, The Regional Liquidity Fund (FLA, in its Spanish acronym) accounts for almost 59% of regional debt, and the securities barely reached 14% of the total at the end of 2022.
• The cost of regional debt has followed a downward trend. With the entry into force of the liquidity mechanisms, the fall in the implicit rate accelerated, which seems to have protected the regions from the rise in the cost of access to financing in 2022 and 2023.
• The different financing systems and the level of competences determined the volume of debt. In terms of GDP, Valencia (44%), Castille-La Mancha, Catalonia (both 33%) and Murcia (32%) remain the four most indebted regions.
• The deterioration of the fiscal balance during the financial crisis was the main cause of the increase in regional debt between 2008 and 2022.
• In the absence of the FLA, the autonomous communities would have had to assume an average additional cost of more than 1pp, which would have placed the debt of the autonomous communities at a higher level than that of the FLA.

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