Spanish regional debt interest costs projected to rise sharply

A report by the Foundation for Applied Economics Studies (Fedea) indicates that interest payments on public debt for Spain's autonomous communities are projected to rise significantly due to higher interest rates and high debt volumes. By 2029, total interest spending for these regions is expected to reach 11,528 million euros, nearly triple the 3,608 million euros recorded in 2022.

While the debt-to-GDP ratio for these communities is expected to decrease from a 2020 peak of 27.2% to 17.1% by 2029, the cost of servicing that debt will require redirecting resources from other public policies. The report highlights extreme variations in interest expenditure growth across regions. La Rioja faces an 804% increase, while the Valencian Community, Canary Islands, and Murcia are also seeing increases exceeding 400%.

In contrast, Navarre and the Basque Country are among the regions with the lowest projected increases in interest spending, at 39% and 96% respectively. The Canary Islands, despite a projected 410% increase in interest costs, maintain relatively healthy accounts, with its regional debt expected to drop from 13.2% of GDP in 2022 to 9.1% by 2029.