The 2021 budget plan of the Consell centers on a post-pandemic recovery path. The Valencian Government chose to deploy public funds to revive economic activity and heal the social wounds caused by the pandemic, while expenses rose beyond income as a result of the extraordinary surge in State resources that did not fully cover revenues, producing a deficit above 2,000 million in the public coffers.
The 2021 General Account Audit Report from the Sindicatura de Comptes shows a deficit increase compared with the previous year, climbing from 1,830 million euros to 2,153 million euros. The supervisory body approves the accounts, noting the need for additional State funding due to covid. In both 2020 and 2021 the result remains negative, though it improved versus 2019, when a deficit of 2.6 billion was logged.
It is explained that this deficit does not stem from spending above the regional average, but from revenues below it, notably those generated by the regional financing system. The core issue is not excessive spending but the absence of stable, permanent income. To put it plainly in numbers: expenses already exceeded revenues by 1,830 million in 2020; by 2021, expenses rose by 1,700 million while revenues increased by 1,400 million, leaving a 300 million larger deficit.
The situation is substantive, not incidental, and the supervisory body’s analysis covers the four-year period from 2017 to 2021 to point out that revenue from the regional financing system is not sufficient to meet the agreed budgets. It does not even cover non-financial expenses that do not involve debt. The report notes that the system’s coverage ratio declined over those four budgets, from 64% in 2017 to 48% in 2021.
In its analysis, the Sindicatura warns of “special circumstances” in 2020 and 2021 marked by the pandemic and the extraordinary support from the State and the European Union. These extraordinary injections, it notes, risk widening the deficit again once unconditional additional financing is removed, a deficit that will be hard to balance with the existing regional financing framework, as has been highlighted in earlier reports. The picture was challenging, but it would have been worse without the extra funds.
Nothing comes free: the outcome for the Generalitat is distinct because the state mechanisms translate into higher debt, while the regional financing is received without compensation.
Arcadi Spain evaluates the epidemic bill at 3.011 billion
The covid bill for the Community of Valencia rose to 3,011 million euros between 2020 and 2021, with 1,227.9 million attributed to the 2020 fiscal year and 1,783.6 million to 2021.
This figure is among the conclusions drawn by Finance Minister Arcadi España after reviewing the Sindicatura de Comptes report on the Generalitat’s 2021 general account released recently. España notes that the agency approves the Consell’s economic management and recognizes the efforts to strengthen public services during the covid period.
The Finance Minister acknowledged that indebtedness is the only viable option for the Consell to guarantee essential service provision amid underfunding and stressed the urgency of restoring the historic debt level. He highlighted that the audit documents a substantial increase in budget execution, amounting to 1,734 million euros more than in 2020, and that creditors of the Generalitat stand to be at least 713 million euros.