The government mobilized substantial resources yesterday as it prepared for autonomous regions, with the Fiscal and Financial Policy Council (CPFF) weighing the needs of communities amid ongoing macroeconomic pressures, including rising prices. The move signals a cautious path toward potential structural reforms in how distribution funds are allocated, a topic long urged by regions like Valencia that have felt the impact of current benchmarks.
Specifically, the Ministry of Finance confirmed that following the CPFF session, the autonomous regions will receive 24% more funding from the State next year, surpassing 134,000 million. The Valencian Community stands to gain 13,540.6 million, a 26.5% rise from the prior year and the largest allocation in the history of the program. Of this total, 11,653.15 million covers 2023 installments, while 1,887.5 million accounts for swaps from the previous year.
Moreover, the increase narrows the resource gap for Valencia relative to other regions, with its gains running two and a half percentage points above the national average for transfers.
The larger resource package was the central claim brought by Finance Minister Arcadi España, who led the delegation at the annual gathering that gathers the Treasury with regional council members from the sector.
Attendees left the meeting with a sense of satisfaction in Valencia’s camp. There is confidence in the government’s recognition of inflationary pressures and the need to bolster regional budgets. In particular, Generalitat will receive 2,835 million more than the previous year, a figure the minister said would support broader regional budgeting and planning.
The minister’s stance also reflected a belief that these transfers will grow more sharply in Valencia than in other regions, reinforcing the government’s commitment to regional resilience amid price pressures.
The glass is half full
Still, there was a notable omission among Generalitat representatives: the chance that the Treasury would set a concrete timetable for broader financing-system reform. Such a timeline remains the keystone that could unlock additional resources for Valencia. With a cordial government environment and courtesy measures like yesterday’s agreement in Madrid, the window toward an election year appears to be opening.
Montero signaled that the Treasury would soon deliver a document addressing autonomies’ reform proposals, a move interpreted by the Generalitat as a signal to kick off the reform process.
There was limited optimism within PPCV. Its leader, Carlos Mazón, criticized the regional leadership for not insisting more vigorously on funding Valencia deserves, calling the absence of tangible reform measures an offense to regional autonomy.
Airef will seek solutions to regional debts
The body will assess the sustainability of the region’s obligations at the request of Valencia.
Earlier this week, Generalitat noted that the Ministry of Finance had accepted Arcadi España’s proposal to commission a study on the viability of debt by the Independent Authority for Fiscal Responsibility (Airef), a small victory in the ongoing struggle against underfunding. The objective is to understand the long-term impact of debt levels on regional finances.
Minister Montero pledged that Airef would deliver an analytical document detailing the root causes of the high debt burden among communities and how it links to the financing framework.
In Valencia’s case, nearly 80% of liabilities are tied to the limited resources it receives from the State. España suggested that Airef examine practical solutions to a problem that could threaten long-term economic stability for the autonomies, especially in a climate of rising interest rates that push up the cost of financing.
From the minister’s perspective, the focus is on addressing the two-sided challenge: underfunding and the higher cost of servicing debt. The Treasury did not reveal Valencia’s proposal to create asymmetric deficits to give more headroom to the least-funded regions. Still, the Treasury confirmed that the autonomies will enjoy an increase in debt-issuance capacity from 0.1% of GDP to 0.3%.