Debt dynamics in the Valencian Community and other autonomous regions
The Valencian Community is established as an autonomous region with a higher debt volume relative to GDP. When measuring debt per capita, it ranks just behind Catalonia. This pattern appears in the BBVA Research report titled Indebtedness of Autonomous Communities, published this week. The report tracks how this indicator has evolved in recent years.
Overall, the study shows that last year the total debt of the autonomous communities reached a historic high, amounting to 316.8 billion euros and representing 23.9 percent of national GDP. Yet regional differences are stark. In this context, the Valencian Community has a debt level equivalent to 44.5 percent of its GDP, placing it at the top among regions. It is followed by Castile-La Mancha with a debt share of 33.7 percent of wealth, and Catalonia at 33.5 percent.
On the opposite end of the spectrum, the Canary Islands stand out as the least indebted region, with debt close to 13.1 percent of GDP. They are followed by the Basque Country at 13.9 percent and Navarre at 14.3 percent.
Comparison of regional debt. BBVA Research
When examining debt on a per capita basis, Catalonia shows the highest figure at 10,981 euros per resident, while the Valencian Community sits in second place with 10,810 euros per person. This per capita debt has risen markedly over the past eight years. In 2015, the Valencian Community carried a per capita debt of 8,517 euros, meaning an increase of 2,293 euros by the end of 2022.
Although the BBVA Research study did not deeply probe financing disparities, the Valencian Community is recognized as one of Spain’s worst financed. This implies that public funds per resident for service delivery are relatively low, prompting several councils in recent years to rely on borrowing to cover ongoing costs.
Evolution
The report highlights several trends. Regional debt stayed at moderate levels through 2007, with average annual growth around 7.3 percent. In that year, the autonomies carried debt of 61.96 billion euros, equivalent to 5.8 percent of GDP.
Insufficient financing: Covid funds and a substantial interest burden fade into the background
The financial crisis of 2008 accelerated debt growth. Between 2008 and 2015, regional debt rose at an annual rate of about 20 percent, reaching roughly 25 percent of GDP. Over the following five years, debt stabilized near 24 percent of GDP. The impact of the pandemic pushed debt higher again, and by the end of 2022 regional debt reached a record 316.8 billion euros, or 23.9 percent of GDP.