The Valencian Community is projected to finish 2023 with a deficit equal to 1.5% of its GDP. These figures come from the Independent Accountability Authority (Airef), which revises the prior year’s projection by adding half a percentage point. Airef explains that spending has risen while expected income from online assessments has fallen, shaping the new outlook.
In its initial 2023 Budget report, the Valencian Community had forecast a deficit of 0.3% of GDP. Airef has revised this stance, noting that the regional government did not record a transfer from the State totaling EUR 1,336 million, a line Airef calls a standard element in regional financing that it still labels as a recurring item. Despite the updated 1.5% deficit, the figure remains notably lower than the 2022 shortfall for Valencia, which reached 3.1% of GDP according to the Ministry of Finance data—an exceptional gap among autonomous communities.
Beyond these changes, Airef updates its projections for tax income tied to investments and disposals of European funds, while reducing the budgeted expenditure and the level of activity anticipated within the budget, offset by corresponding adjustments in other areas. Total community income is expected to grow by 14% from the previous year, reaching 15.8% of GDP when funds from the Recovery, Transformation and Resilience Plan (PRTR) are excluded.
On the spending side, excluding PRTR-financed items, expenditures are anticipated to rise by 3% year over year, reaching 17.3% of GDP. Regarding Valencian debt, Airef estimates a level around 44.5% of GDP for 2023, a higher projection than in the prior report. The authority also suggests that calculable spending, as defined for the spending rule, could exceed a 3% increase in 2023 for the Valencian Community.
Interpreting these findings, Airef notes that a 1.5% deficit in 2023 signals an improvement from the year-end balance of the previous year. In 2022, the Generalitat recorded a deficit of EUR 3,847 million, equivalent to 3.11% of GDP, a figure that surpassed current expectations based on official Ministry of Finance data.
Wake-up call to Alicante City Council for increased spending
Among the 26 local entities examined by Airef, two from the Valencian Community face direct attention: the Alicante City Council and the Valencia City Council. The Financial Authority urges these authorities to avoid further structural increases in spending or declines in revenue that would lack guaranteed permanent financing. In this context, Airef highlights that calculable spending grew by more than 9% in 2022, a pace not seen in prior years, following a rise of over 7% in 2021. The report also references the city councils of Barcelona, Madrid, Córdoba, Palma and Valladolid, along with the Provincial Councils of Valencia and Tenerife, and the Consel of Mallorca and Guipúzcoa as part of its broader assessment. [Citatión: Airef findings]