Madrid leads debt in Spain since the outbreak of the coronavirus | Madrid

With 1,000 million raised through bonds and loans, the Community of Madrid has become the region that has become the most indebted since the coronavirus crisis erupted. The exit to the markets, which has the approval of the central government, arouses criticism in Vox (only possible partner of the Executive that have formed PP and Cs), PSOE, Más Madrid and Podemos. The managers of the Government of Isabel Díaz Ayuso have calculated that they need a minimum of 2,000 million to alleviate the health, social and labor catastrophe that is causing the pandemic.

“I am in favor of getting into debt for all the billions that are needed,” said Ignacio Aguado, regional vice president and Cs leader, in an interview with EL PAÍS. “It is now when it is necessary to do it. Then we will return to orthodoxy, to austerity, and we will see how we are returning them, ”he added after seeing how the region has captured 700 million in green bonds since the end of April (for environmental projects), to which is added a loan of 200 signed with the Development Bank of the Council of Europe and 52 placed in a social bond to face the consequences of the virus.

The Community of Madrid carries 33,000 million euros of debt

It is this debt-conditioned future that worries opposition parties. Although Madrid closed 2019 being the region of the common regime system with a lower level of debt in terms of GDP, along with the Canary Islands (14%), it carries a mammoth weight: more than 33,000 million. In parallel, the regional executive is witnessing a new internal shock on how the crisis should affect its fiscal policy: the PP values ​​lowering taxes to stimulate the economy after the crisis, while Cs believes that this is not the time to do it.

“These emissions will cost all Madrid residents between 40 and 50 million,” calculates Fernando Fernández Lara, of the PSOE, on the interest to be paid. “It is really strange that having EU financing instruments in more favorable conditions and being able to attend state financing through the Autonomous Liquidity Fund and the Financial Facility Fund, which are at 0%, Madrid will get funds paying large interest to the buyers of the debt. ”

“In order to attend very urgently to some urgent expenses generated by the covid, the Community is being forced to indebt all Madrid residents for the PP-CS-Vox Government’s fiscal gift policies,” argues Eduardo Gutiérrez, deputy for Más Madrid , in reference to the discounts to the estate taxes, successions and donations.

“None of these indebtedness would be necessary if the PP had not turned Madrid into a tax haven that is dedicated to competing unfairly with the rest of the communities,” adds Sol Sánchez, of Unidas Podemos IU Madrid en Pie. “As acknowledged by the Treasury counselor, Javier Fernández Lasquetty, Madrid’s tax harmonization with the rest of the communities would mean tax revenue of 5,094 million,” he continues. “In addition, the State Government has approved a game of 16,000 million to face the health emergency. It is not acceptable that, while the rest of Spain is in solidarity with Madrid (because we all pay those extraordinary funds), Madrid wants to continue being unsupportive ”.

“The way is first to reduce political and superfluous spending,” conclude Vox parliamentary sources, using arguments already defended by Rocío Monasterio. “This way we will have to indebt the people of Madrid less, the debt is nothing more than a deferred tax on our children.”

Economic motor

However, the severity of the health crisis is also serving to measure the financial strengths of the region. Madrid is the economic engine of Spain: no other region contributes more to the national GDP. It has also been the Community most affected by the pandemic: it already has almost 70,000 positive for coronavirus and 15,000 deaths related to the disease. And no other region has had the option of financing itself in the amount that Madrid has done during the crisis: the previous situation of the accounts of various regions has prevented them from going to the markets.

Among the rest of the communities, only the Basque Country has approached the Community in raising funds in the market, although it has not reached 800 million

Since March 1, only the Basque Country has approached the Community in its fundraising in the market, although it has not reached 800 million (the majority anticipated before the crisis; of them, 130 specifically to face to the pandemic). The Canary Islands plans to do so now for more than 300. Extremadura has made three short-term credit operations for 200 million. And Navarra has remained at 75. The rest of the regions have not taken the step, several because they did not have the authorization of the Government due to the situation of their balance sheets.

“For Madrid it is not a problem of liquidity, it is a problem that these expenses were not foreseen,” they explain in the Ministry of Finance, where they stress that 252 of the 1,000 million raised are going to be used to fight the pandemic.

Is the Community ready to face a crisis that will mean, at least, the loss of 10% of its GDP and a cut of 400,000 jobs? The S&P rating agency has maintained its rating (A- / A-2) and has opted for a “positive” perspective. The central government, in addition, has promised to distribute more than 10,000 million among the communities. And the markets seem to respond to Madrid’s debt. That is the present. Only one thing is known about the future: there will be a debt to repay as high as the Himalayas.

With information from Camilo S. Barquero, Pedro Murillo, Pedro Gorospe, Eva Saiz, Cristina Vázquez, Juan Navarro, Javier Doria and Virginia Badillo.

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