risk rating agency Standard and Poor’s It developed the ‘rating’ (credit risk assessment) perspective. Valencian Community stable to positive. The agency, one of the leading names in the sector, estimates that this decision will be announced by the Generalitat 2024 Budget, which is the first of the new government. Carlos Mazón, They have a more “realistic” and “cautious” approach, both in terms of spending measures and revenue forecasts.
The change in perspective is a message to the financial markets and gives the Valencian Community the opportunity to raise this rating within two years. In addition to the financial project, Standard and Poor’s He underlines that the new state panorama can benefit the Valencian Community by paying off part of its debt within the framework of the agreements signed by the Valencian Community. Government of Spain It is negotiating with its investment partners as a change perspective that will increase their revenues in regional financing.
“We revised our outlook from stable to positive,” the rating agency’s Generalitat statement said, adding: “The positive outlook is Improving budget performance and debt over our two-year forecast horizon.” As stated in the report, this change in rating is due to two points: the effects of investment agreements Pedro Sánchez and the preparation of budgets by the “more realistic” regional government.
“New regional government manages 2024 budget more cautiously“, explains the S&P report. It details that the previous fiscal management “decided to significantly increase spending.” Convergence to national levels in essential public services causing “huge budget deficits”. However, the agency understands that with the change in regional government, “the current administration has put an end to this practice with what we consider to be a more realistic budget approach.”
Standard and Poor’s points out that the new government has “included in its budgets some specific demands on central government that may not be realized” (it does not mention this, but the accounts include, among others, a line item for other health care payments). autonomy and the number of tourists, e.g. 900 million), but with “more prudent financial management practices” and “more revenue generated from the financial system” of the Valencian Community “Improvement in operating deficits“.
At this point, the S&P report draws attention to the impact of investment agreements in the Valencian Community on debt relief and financing reform. Regarding this, the rating agency Valencian Community “If the central government agrees to address the issue of underfunding we could see an increase in its resources “Through repeated additional transfers”. This is included in the agreement between PSOE and Sumar, and Sánchez committed to it in his inauguration speech.
However, the agency assures in its report: “Without recurring additional grants from the central government to address Valencia’s funding gap, the region will not be able to balance its budget“. This is not the only measure that the rating agency points out regarding the agreements and their impact on regional coffers. It therefore shows that the Valencian Community “could benefit from the absorption of debts by the central government.”
PSOE and ERC agreed Reducing Catalonia’s debt resulting from the economic crisis by 20% from 2009 to 2017. In his appointment speech, Sánchez assured that the measure would be reflected in all autonomies, although he did not detail the amounts. “If significant, it could lead to financial improvements,” Standard and Poor’s report on the measure adds. According to calculations by Ivie (Valencian Institute for Economic Research), the amount that the Valencian Community could be relieved of debt by copying the Catalan pact would be around 9.6 billion, but he goes further and claims that this includes another $17,000 billion. insufficient funding.
The improvement in the prestigious institution’s rating (but continues to warn of a “very high debt burden” and a “high level of structural deficit”) contrasts with another risk assessor’s warning about the political situation in Spain. Moody’s (one of the leading companies) warns about the negative impact of agreements with ERC or Junts on Spain’s sovereign credit, pointing out “increased political risk”.