Valencian Community debt dynamics over four years
The Valencian Community stands as the second largest debtor in absolute terms and, when viewed relative to prior accumulations, holds the second position in the trend of debt growth. By the end of 2023, the Generalitat reported liabilities totaling 57 billion 246 million euros. This figure marks an increase of 6 billion 439 million euros over the previous four years, surpassed only by Catalonia which registered 7 billion 314 million. The year ended with a debt level that was 12% higher than the year before, placing Valencia in second place behind Murcia, which accounts for 18% of its total, as the most significant peacetime debt rise to date.
The strain brought on by the Covid-19 pandemic did not only overwhelm hospitals across Spain; it also emptied regional coffers, forcing a wave of borrowing to cover rising health costs and the broader slowdown in economic activity. Four years into the pandemic, 13 of Spain’s 17 autonomous communities resorted to additional borrowing to stabilize public services and compensate for revenue shortfalls.
The fiscal rule suspension enabled such borrowing without penalties or deductions. In this period, only Asturias, Andalusia, the Balearic Islands, and Navarra exhibited a decline in debt. All other regions saw their liabilities climb, underscoring a broad national trend in emergency financing.
Overall, the pandemic debt bill reached 22 billion 88 million euros, though the impact was not uniform across communities. Catalonia and the Valencian Community emerged as the most financially burdened, not only leading in absolute debt but also representing more than half of the total debt accumulated by these two regions over the period.
Within the Valencian accounts, roughly 29% of the red balance is linked to the period when the Consell was led by Botànic. The administration’s share underscores how political cycles can correlate with debt dynamics, though it remains only a portion of the broader fiscal picture.
When the debt distribution is examined, the Valencian Community is seen to have generated revenue comparable to the combined totals of Madrid, Murcia, Galicia, and the Canary Islands over the same four-year span. Those four regions rank in the third through sixth positions for the largest net balances during this interval, collectively amounting to about twice the Generalitat’s annual budget.
The Valencian Community has grown accustomed to occupying the peak of debt among autonomous communities. The prominence holds whether debt is measured as a share of GDP, in absolute terms, or relative to the population. The phenomenon persists even in a context where per capita finances have suffered the greatest impact, suggesting that debt is not simply an isolated issue for one region but part of a broader structural challenge.
Insufficient funding creates a clear linkage to debt levels. When government revenue falls short, gaps widen unless expenditure is trimmed. A clear illustration is seen in the case of Murcia, which ranks fourth in debt growth with an increase of 1,890 million euros and eighth overall. The Republic observed an 18% rise in Murcia’s debt, the largest relative increase among the four-year period, more than Catalonia and Valencia combined.
On the opposite end of the spectrum, Andalusia stands out as an exception that managed to reduce its debt. With a cut totaling 78 million euros, Andalusia is among the top three regions to reduce debt alongside the Balearic Islands and Navarra. Yet, Andalusia remains the region with one of the highest debt levels nationally, reflecting a complex balance between regional financing and social commitments.
Looking ahead, debt measures are expected to be a central topic in negotiations between the central government and the autonomous communities. Discussions in the coming months may explore forgiveness or mitigation of some liabilities. Beyond any potential reductions, Valencia’s administration has called for a broader reform of the financing system, arguing that simple relief would merely serve as a patch without altering the underlying distribution model. These conversations reflect ongoing concerns about fiscal sustainability, equity, and the capacity of autonomous regions to fund public services without compromising long-term economic stability.