As another year winds down, many Spanish regional governments are likely, again, to miss their deficit goals. A recently-minted organization called the Independent Authority on Fiscal Responsibility says that several regions are in the red.
Yesterday, the think tank Fedea published some numbers that support the fears and show a historic budget imbalance. Combined, regional debt amounts to 1.8% of GDP, which is eight tenths of a point more than the Finance Ministry allowed for the year. Fedea's forecast are based on data that it compiled through July and extrapolated for the rest of the year, but their outlook is sound since most spending for the year has already been decided.
That said, some regions could use an accounting trick to put this year's spending on next year's budget. Six of them will likely use this strategy among others that the government allows such as a national liquidity fund that gives hurting regions some fiscal support. In practice, the fund is not a sustainable solution.
The current legislature will end without coming up with a strong solution to curtail regional spending. At this point, it does not look like sweeping public-sector reforms are going to happen.
