Spanish regional debt interest payments projected to triple by 2029

A report by the Foundation for Applied Economics Studies (Fedea) projects that interest payments on the debt of Spain’s autonomous communities will nearly triple by 2029. Spending on these interests is expected to rise from 3,608 million euros in 2022 to 11,528 million euros by 2029.

This sharp increase is attributed to two primary factors: rising interest rates driven by the European Central Bank’s monetary policy to combat inflation and the high volume of accumulated regional debt. The average interest rate on regional public debt is projected to climb from 1.1% in 2022 to 3.3% by 2029.

The financial impact will be unevenly distributed across regions. Catalonia is expected to face the highest annual interest costs, reaching 2,968 million euros in 2029. Other regions facing significant increases include the Valencian Community, Madrid, and Andalusia. Conversely, La Rioja and Navarra are projected to see much lower absolute increases.

This rising fiscal burden complicates regional budget management, potentially diverting funds away from essential services such as healthcare, education, and social services. The situation also intensifies the ongoing debate regarding the regional financing model between the autonomous communities and the central government.