PSOE Urges Canary Government to Embrace Debt Cancellation for Economic Recovery

The PSOE has called on the Canary Islands Government to accept a proposal for partial debt forgiveness, emphasizing the need for a clear stance on the reform of the autonomous financing system.

Urgent Need for Fiscal Reform

During a recent plenary session, Manuel Hernández, the PSOE’s parliamentary finance spokesman, highlighted the importance of defining a clear and ambitious position regarding the long-awaited reform of the autonomous financing system, which has been pending for over ten years. He urged the Canary Islands Government to refrain from penalizing the residents of the islands and to consider the debt cancellation proposal from the Spanish Government, which would position Canarias as the most favored community in Spain.

Hernández criticized the political discourse surrounding this issue, stating that it has been marred by falsehoods and myths, particularly propagated by the PP and Vox parties. He stressed that the focus should shift to a serious discussion about the financial model that the Canary Islands truly require.

Addressing Political Misconceptions

In his address, Hernández questioned what proposal the Canary Islands would advocate for in the potential reform of the financing system, noting that the critical issues of resource allocation and inter-territorial solidarity have been largely overlooked. He accused the Canary Government of lacking substantive arguments against the debt forgiveness agreement reached between the State and the Generalitat of Catalonia, suggesting that their rejection stems from a failure to engage with the realities of the situation.

He pointed out that the proposal for partial debt forgiveness is a necessary response to the financial crisis exacerbated by the Popular Party’s policies and the inadequate management of several regions under their governance. Hernández challenged the opposition, questioning their absence during the establishment of the Autonomous Liquidity Fund, which left the Canary Islands in a position of creditor to other regions.

Financial Benefits of Debt Forgiveness

Hernández emphasized that the current Spanish Government, led by the PSOE, is responsibly addressing the need for reform and proposing a debt forgiveness plan that is fair and reasonable. This plan includes a total of €3.259 billion, which accounts for 50% of the Canary Islands’ debt, significantly higher than the national average.

He noted that the proposed debt reduction does not take into account revenues from the Economic and Fiscal Regime (REF), effectively countering one of the main arguments from the opposition. The write-off would position Canarias at 6% of GDP, aligning it with the national average, and would reduce the debt per adjusted inhabitant by €672.89, making it the fourth most benefited autonomous community.

Furthermore, Hernández explained that the criteria for this debt forgiveness are coherent and similar to those applied in the distribution of COVID-19 relief funds, which had previously benefited the islands. He highlighted that 75% of the debt forgiveness is based on adjusted population, acknowledging that all communities faced income declines, albeit with varying capacities to manage those declines.

Ultimately, he asserted that this measure not only enhances the financial standing of the Canary Islands but also provides greater flexibility in spending, which could strengthen public services across the region. Hernández concluded by posing two critical questions: whether Canarias would emerge in a better financial position after the debt write-off, to which he confidently affirmed, and whether the region would accept this voluntary measure.

Key points

• The PSOE urges the Canary Islands Government to accept a debt cancellation proposal from the Spanish Government.
• Manuel Hernández emphasizes the need for a clear stance on the reform of the autonomous financing system.
• The proposed debt forgiveness amounts to €3.259 billion, representing 50% of the region’s debt.
• This measure would position Canarias as the most favored community in Spain.
• The criteria for debt forgiveness are based on adjusted population, similar to COVID-19 fund distributions.
• The debt write-off would reduce the debt per adjusted inhabitant in Canarias by €672.89.
• Hernández criticizes the political discourse surrounding the financing system as being filled with myths and falsehoods.