The communities will need more than 27,000 million to finance themselves in 2019 | Economy


The autonomous communities continue to clean up their accounts, albeit at a slower pace. At the beginning of the crisis they were identified as the culprits of the unbridled public deficits incurred by Spain. The Government of the PP toughened the law to try to straighten the regional accounts. The situation was so delicate that the markets closed the doors to the communities, which suffered to finance themselves.

To alleviate this situation, the central State launched a lifeline to the regions in the form of loans. The autonomies no longer had to go to the market to negotiate dog face with investors since they found more advantageous conditions in the Treasury window. This is how the Autonomic Liquidity Fund (FLA) and the like were created, which have lent more than 166,000 million since then to the autonomies.

Almost a decade after the financial crisis broke out, Moody's believes that "the country's strong economic prospects drive a 'stable' outlook for the Spanish regions in 2019," according to a report released Wednesday.

More volume of net debt

The dynamism of the Spanish economy, which will continue to grow in 2019, will boost tax revenues, which will help balance regional accounts. "However, the regional debt stock is expected to increase," Moody's says. "The total net debt for the rated regions (11 of the 17, representing 85% of GDP) by Moody's will reach around 271,000 million in 2019, compared to 263,000 million in 2017," he adds. However, the debt as a percentage of GDP will be reduced.

DEBT OF THE COMMUNITIES

Source: Moody's with data from the Ministry of Economy.

"The economic growth will improve the operating margins of the regions and will drive the deficit reductions in 2019," says Marisol Blázquez, an analyst at Moody's in a note released by the agency. The favorable cycle continues to swell the collection and the distribution of the financing system is increasingly generous. In fact, autonomies will receive more money than ever from this system. "Tax revenues are expected to represent around 75% of operating revenues in 2019, compared to 66% in 2011."

Despite the budgetary slack, the financing needs will remain high. Moody's expects the regions to require more than 27,000 million extra to finance themselves in 2019. Catalonia and the Valencian Community will be the ones with the greatest needs. The main source of financing will continue to be the Autonomous Liquidity Fund (FLA) and the Financial Facility Fund (FFF) of the State. Moody's expects these funds to inject some 20,000 million into the autonomies. Some like Madrid, the Basque Country or Andalusia have already returned to the markets and will have more options.

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