The cost of debt for Spain’s autonomous communities has surged by 120% over four years and is projected to triple by 2029, according to a study by the Fundación de Estudios de Economía Aplicada (Fedea). The rise is driven by the European Central Bank's tightening monetary policy and the sharp increase in interest rates, which have significantly impacted public finances. As of 2026, the total regional debt stands at 348.149 billion euros, with the burden falling unevenly across regions. By 2029, the annual interest payments are expected to reach 11.528 billion euros, up from 3.608 billion euros in 2022, when Russia invaded Ukraine. The financial strain is particularly acute for certain regions. Catalonia will face the highest interest costs in 2029, with an estimated 2.968 billion euros, nearly three times its previous level. The Community of Valencia follows with 2.080 billion euros, representing a 476% increase. Madrid will see its interest payments rise to 1.409 billion euros, a 85% increase, while Andalusia will pay 1.356 billion euros, up 257%. In contrast, La Rioja will experience the sharpest jump, with its interest costs increasing from 5 million to 45 million euros, a 804% rise. Navarra, however, will see the smallest increase, rising from 62 million to 86 million euros, a 39% growth. This growing financial pressure has sparked debates among regional governments and the Ministry of Finance regarding the new financing model proposed by Catalonia. Although a planned summit was postponed, discussions are set to begin in September. The disparity in how different regions are affected highlights the complexity of managing public finances under current economic conditions. The study warns that these increased interest expenses could force regional governments to reassess their spending policies, especially in areas such as education, healthcare, and fire prevention, where tensions already exist. The situation mirrors the challenges faced by Spanish households with mortgages, as rising interest rates erode disposable income and constrain spending power. Since 2022, when the European Central Bank shifted its monetary policy due to inflation triggered by the war in Ukraine, the financial obligations of autonomous communities have grown substantially. The impact is compounded by the broader economic context, including the aftermath of the pandemic and ongoing global uncertainties. Despite the rising debt burden, the overall debt-to-GDP ratio for autonomous communities has slightly decreased. In 2022, the debt stood at 317 billion euros, equivalent to 23% of the regional GDP. Today, it amounts to 341 billion euros, or 19% of the GDP, and is projected to reach 347 billion euros, 17% of the GDP, in 2029. While Catalonia will see the largest absolute increase in debt, other regions will face higher debt ratios relative to their wealth, reflecting varying levels of financial stability. Meanwhile, the Sociedad Estatal de Participaciones Industriales (SEPI), a state-owned entity responsible for strategic investments, has returned to capital markets after three decades. It recently raised 161.8 million euros through six bond issuances in five months, marking a historic move. This decision comes amid heightened debt levels for the company, which has been involved in major acquisitions such as Telefónica and Talgo. Despite the legal imputations against its former executives, SEPI maintains that there is no direct legal connection between the judicial issues and its current financial strategy. The move underscores the broader trend of public entities seeking external funding to manage growing liabilities.
★
Keep the news honest.
ObjectiveNews is reader-funded and ad-free — we show you the bias instead of hiding it. Support independent journalism for €4/month.
Become a Supporter
Spain
