The Spanish Ministry of Finance has published a document inviting public consultation on a preliminary law regarding the forgiveness of a portion of autonomous community debt.

This initiative, which emerged after a period of silence, seeks to gather opinions from the various stakeholders and organizations that may be affected by the proposed legislation.

The Ministry characterizes this debt forgiveness as "exceptional, punctual, and non-recurrent." The proposed forgiveness, agreed upon by the Spanish Socialist Workers' Party (PSOE) and the Republican Left of Catalonia (ERC), is available to all communities under the common regime and will subsequently require approval from the Congress, a process expected to face challenges given the current composition of legislative seats.

The consultation observation period is open from May 15 to May 30, allowing stakeholders to submit comments and supporting documents.

The instructions outline the reasons for the proposed debt forgiveness, including the financial circumstances that prompted the need for such a measure.

Initiating public consultation is a common practice prior to the approval of legislative measures.

This contrasts with a recent public consultation launched by the Ministry of Economy regarding the hostile takeover bid by BBVA for Banco Sabadell, which relates to a corporate matter and does not require legislative action from Congress.

The proposed debt forgiveness figure exceeds €83 billion, representing nearly 25% of the total liabilities owed by the autonomous communities, excluding Navarra and the Basque Country, which are not included due to their distinct funding systems.

The document notes that the state would eventually assume this debt reduction.

The text opening the consultation highlights how the financial crisis of 2008 and subsequent sovereign debt crisis led to excessive indebtedness among the autonomous communities.

It positions the proposed debt forgiveness as a mechanism to reduce interest expenses and facilitate a gradual return of the communities to debt markets.

Many of these regions remain reliant on extraordinary liquidity mechanisms—affordable credit lines activated by the Treasury in 2012—designed to provide financial support to regions struggling to secure private funding.

Catalonia has been the largest beneficiary of these financial tools.

The Ministry of Finance stresses that the debt forgiveness will "strengthen" the financial autonomy of the autonomous communities and ultimately enhance their financial sustainability, aligning with the new fiscal rules framework approved by the European Union.

The return to the markets is also aimed at reinforcing the fiscal responsibility of the autonomous communities, which currently do not face market-imposed discipline in the management of public finances.

Additionally, the Ministry emphasizes that the measure operates under the principle of voluntariness, meaning that beneficiary communities must accept the conditions stipulated in the regulatory framework.

This aspect is significant, as many regional leaders—particularly from the People's Party (PP), which governs 11 of the 17 autonomous communities—have openly opposed the proposal and have called for a reform of the financing system, which has been pending for a decade.

The debt forgiveness proposal was first announced by ERC leader Oriol Junqueras on February 24, detailing the amount earmarked for Catalonia (approximately €17 billion), making it the second most beneficial region after Andalusia.

Following the announcement, Finance Minister María Jesús Montero convened a press conference to present details of the overall plan.

Subsequently, the proposal was discussed at a meeting of the inter-regional Fiscal and Financial Policy Council (CPFF), where issues related to regional finances are debated among the Ministry and the autonomous communities.

Following this meeting, the Ministry has scheduled bilateral commissions with each community, and the next step is to formalize the proposal for discussion in Congress, as it requires organic law status given its implications for several aspects of the Organic Law on Budgetary Stability and Financial Sustainability.