Spain approves fiscal measures allowing regions to use surpluses for investment

The Spanish Council of Ministers has approved a Royal Decree-Law introducing fiscal and financial measures for several autonomous communities. This reform allows regions with budgetary surpluses from 2025 to direct those funds toward Financially Sustainable Investments (FSI) during 2026 and 2027, specifically targeting essential sectors such as housing.

Under the new rules, communities with a debt-to-GDP ratio below 12.4% may use previous surpluses for investments between 2026 and 2028 without these expenditures counting against the spending rule. Eight regions are expected to benefit, including Asturias, the Canary Islands, Navarra, the Basque Country, Andalusia, the Balearic Islands, Cantabria, and Galicia. In Galicia, this could unlock approximately 157 million euros for investment.

The measures come amid ongoing debates regarding the regional financing model. In the Canary Islands, the 'Platform for 5%' is calling for an additional 800 million euros for education in 2027, leveraging the new financing model. Meanwhile, the Andalusian government has expressed dissatisfaction with the current system, arguing it fails to provide equitable per capita funding compared to wealthier regions.