The Balearic Goverment's debt will reach 9,000 million euros at the end of this year but not all of it is money owed to the banks as almost half, about 4,300 million, is money owed to the Government of Prime Minister Pedro Sánchez. The Balearics has had no choice but to ask for loans from the State because the resources of the financing system are not enough to cover its needs and that is the justification given to ask Madrid to now write off the debt.
The Islands have had to ask the Government for money because the funding that comes to them through ordinary channels is not enough, therefore the local government say it is logical that Madrid compensates for this deficiency and forgives the debt.
The data handled by the Balearic Government is that at the end of the year it will be left with a total debt of less than 9,034 million. Of this amount, a total of 4,021 million corresponds to debt with the State, which represents approximately 48%. The debt with Madrid had reached 6,100 million, which represents almost the budget that the Government will have next year.
Balearic Finance Minister Rosario Sanchez is clear that this must be one of the submissions of the claim that the Balearics will raise both to the Government and to the other autonomous communities. Her proposal is that the 4,000 million owed by the Balearic Islands to the State be assumed by the Government. This absorption of the debt of the autonomous communities will not affect it, for the purposes of the stability rules of the European Union, the debt of the autonomous communities is already recorded as Spain's overall debt. However, for the Balearic Islands it will be a relief.
"This cancellation of the debt is very important to achieve the objectives of budgetary stability," says Sanchez. In fact, the Finance Ministry believes that this debt cancellation does not have to affect only the indebtedness with the State since the Government could also take charge of the money owed to the banks, those other 5,000 million remaining.
A report conducted some years ago by the Sindicatura de Comptes de Balears, concluded that the Balearic Islands has suffered a clear problem of under financing that has had to be solved by asking for money from the banks to be able to balance the accounts.
The Comunity of Valencia has commissioned a similar report since, together with the Balearic Islands, it is another of the territories that has suffered underfunding.
However, political alliance between Francina Armengol and Ximo Puig may not be enough to overcome the resistance of the current Minister of Finance, María Jesús Montero. In her time as Finance Minister of Andalusia, just before being appointed Minister, Montero opposed this claim raised by the Balearic Islands to the rest of the autonomous communities in the meetings of the Council of Fiscal and Financial Policy. Now she will have to give her opinion when the financing system is negotiated.