On 26 February 2025 the Finance Ministry presented to the autonomous communities its proposal to write off part of their debt to the state. Catalonia would be the second biggest beneficiary, with €17.1 billion.
Finance Minister María Jesús Montero presented to the Fiscal and Financial Policy Council, the body where the state and the autonomous communities sit together, on 26 February 2025 the methodology for the state to take on part of the debt the regions owe it, mainly from the Regional Liquidity Fund (FLA) loans received since 2012. The measure was part of the investiture agreement between the PSOE and ERC.
What we know
The total write-off would amount to €83,252 million for the fifteen communities under the common system (the Basque Country and Navarre, which have their own system, are excluded). Andalusia would benefit most in absolute terms, with some €18.8 billion, followed by Catalonia with €17,104 million, the Valencian Community and Madrid. The ministry estimated interest savings for the regions of around €6.7 billion.
The allocation combines two criteria: one part to offset over-indebtedness arising from the financial crisis and the other according to adjusted population. Joining is voluntary. The regions governed by the PP rejected the proposal, seeing it as a concession to Catalan pro-independence parties, and said they would not take part.
The legal path
The write-off requires an organic law passed by parliament. The Council of Ministers approved the draft on 2 September 2025 and, at second reading, the bill on 9 December, sending it to Congress, where its approval depended on the government’s partners.
What it means for taxpayers
The debt does not disappear: it moves from the regions to the state, and all taxpayers pay it just the same through central government debt. What changes is who owes it and how much room the regions have to spend or borrow in future. For Catalonia, with public debt of close to €85 billion, the write-off would cut it by around a fifth.
For businesses and families the direct effect is small, but the debate shapes the funding of regional public services such as health and education, and the tax burden each region applies through devolved taxes such as income tax, wealth tax or inheritance tax.
Changing who owes the money does not change who ends up paying it.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
