The Spanish government takes the first step toward forgiving the 1.741 billion euro debt in the Canary Islands.

PalmThe Council of Ministers approved this Tuesday the preliminary draft of the Organic Law for the partial debt forgiveness of the autonomous communities, which will mean, in the case of the Balearic Islands, that the State assumes €1.741 billion in debt. This is a first step, because Congress must definitively approve the law, something that the president of the islands, Marga Prohens, who disagrees with it, has questioned. However, if it passes, it would reduce the community's debt by 20% compared to 2023, according to the Spanish government delegation.

The total amount of debt that the State will assume from the autonomous communities—not only with the FLA, but also with the commercial banks—amounts to approximately 83.2 billion euros, according to the methodology established in February and agreed upon by a Fiscal and Financial Policy Council (FFPC). In absolute terms, the most benefited regions would be Andalusia (€18.791 billion), Catalonia (€17.104 billion), and the Valencian Community (€11.21 billion), but in percentage terms, the Canary Islands could see 50% of their total debt exonerated. Furthermore, Montero specified that the regions could save between €6.6 and €6.7 billion in debt interest, which, she assured, they could allocate to social spending—provided they comply with fiscal rules.

Although the Spanish government argues that 7 out of every 10 euros forgiven would benefit PP-affiliated communities, Alberto Núñez Feijóo's party maintains its refusal to accept a proposal they consider a "trap." The spokesperson for the Popular Party in Congress, Ester Muñoz, assured that no regional president from the PP will disassociate himself from this position and described it as a "fantasy" that anyone would decide to request it. "They are people who keep their word," he argued, and recalled that they have signed two documents in which they reject the measure, which, according to the PP, means that "all Spaniards" must assume the "consequences of the mismanagement" of the independence movement, reportsAndrea Zamorano.

In this regard, Prohens once again attacked the debt relief and denied the left's argument that the government could allocate the money saved from the debt to social spending. "This is false; that money wouldn't go to social policies," he said. "Hearing the president [Pedro Sánchez] say that something is good for the communities, when all he's been able to do with the migration crisis is wash his hands and apportion blame, let me question that," he continued. "It will be good for him and his pact with the separatist parties."

The government's argument is that the Balearic Islands would end up paying more if this law is approved, because although the state would absorb the islands' debt, "it would still have to be paid on a Spanish scale." "We would end up paying the debt of territories like Catalonia, which is enormous," these sources point out. Instead, the government is demanding that "a debt restructuring, a reduction in the interest on the money lent through the FLA, be negotiated in a multilateral negotiation with clear and transparent conditions."