The Government Forgives 17 Billion That Cataluña Owes the State: the Consequences

Oriol Junqueras has announced an agreement with Pedro Sánchez's Government for the State to forgive Catalonia more than 17 billion euros. The exact figure stands at 17.104 billion, which corresponds to 19.9% of the total that Catalonia owes the State from the Regional Liquidity Fund (FLA).

In total, the FLA debt of the Catalan administration reaches 86 billion euros. Now, thanks to the forgiveness agreed between ERC and Pedro Sánchez, the figure will be 68.882 billion euros. As Junqueras has announced, the agreement with PSOE means that the State forgives Catalonia the equivalent of 42% of the Generalitat's budget. On paper, everything seems like good news, especially for Catalonia, which according to ERC will save 1.5 billion in interest. However, the pact also brings several consequences to consider.

The Consequences of the ERC-Government Agreement

Pedro Sánchez's latest concession to his pro-independence partners may become a double-edged sword. On one hand, it reduces the debt that Catalonia has with the State. Since the Government depends on ERC and Junts in Congress, it has had no choice but to yield to these demands. It will do so by having the State assume this debt that Catalonia has.

But, as the socialist executive has been announcing for some time, it will not be a special concession for Catalonia. Thus, the intention is to extend it to all communities that request it. That is, if they keep what they have promised in recent months, the Government will end up forgiving approximately the same percentage of debt (about 20%) to the rest of the territories.

This way, the only thing this measure will cause is an increase in the State's total debt. A debt that has already been skyrocketing for some time. Now it will be more so at the expense of pleasing Catalans and also the rest of the communities. Among them, for example, Valencia and Andalusia, governed by PP and which could distance themselves from the criticisms that will likely come from Genoa.

Regarding the autonomous communities, however, there is an element that can distort Pedro Sánchez's plans and his 'coffee for all' version of FLA debt forgiveness. And this element is called Isabel Díaz Ayuso. The Community of Madrid is the only one that owes nothing to the State. Therefore, it will not be able to benefit from this Government's intention to please everyone. Predictably, then, a new war will begin between the Government and Ayuso's executive, which we will see how it ends.

This way, Pedro Sánchez makes a move with a play that serves to benefit his pro-independence partners, calm possible unrest in the rest of the communities and, incidentally, try to generate division within the People's Party, with leaders favorable to debt forgiveness (like Juanma Moreno in Andalusia or Carlos Mazón in Valencia) and the leadership against it.