The Indebtedness of the Spanish Regions in the Context of Fiscal Consolidation

Abstract The Spanish regional public debt-to-GDP ratio is the highest in Europe. In this article, we study the evolution of the factors explaining the recent changes in this ratio from 2015 to 2023. Moreover, we estimate the fiscal consolidation efforts needed to achieve a determined level of public debt. Likewise, a macroeconomic model is calibrated to simulate the future evolution of regional public debt under different consolidation strategies. Our main conclusion shows that the most indebted regions should address a significant (and likely unfeasible) deleveraging process over the next years in the context of the new European fiscal rules.