The Balearic Government will have to borrow more than 1 billion euros next year due to a lack of financing to cope with a fall in revenue in 2021 caused by the coronavirus crisis.
The Government has not revealed how much debt has accumulated but it could be close to the 1,500 billion euros that it had to ask for this year to deal with repayments.
In the 2021 economic forecasts included in this year's draft budget, the Government estimated that it will borrow 1,207 million euros to pay off debts in the coming years which were mostly caused by underfunding.
The coronavirus pandemic may change those forecasts, but even if the loan repayments are renegotiated the Government will almost certainly have to ask for at least 1 billion euros.
On top of the 1-1.2 billion debt in 2021, the Government will have to add a still undetermined amount to deal with falling revenues. The Balearic Islands will receive just over 2.8 billion euros from the State next year, which is similar to 2020 but leaves the Islands below the national average.
The Government will also suffer a cut in revenues such as the eco-tax and the transfer of assets. The Autonomous Communities have been allowed to reach a deficit of 2.2% and the Government has promised to pay half of that with extraordinary aid. That leaves a debt margin of up to 300 million euros.
The Government has promised that there will be no cuts in essential services in the next 12 months and that the spending ceiling will remain at 2020 levels or even higher.
The Executive is unlikely to meet the deadline for the draft Budget because it hasn’t even approved the spending ceiling yet.
Government spokesperson, Pilar Costa said on Monday that the delay will not affect the approval of the accounts in Parliament before the end of this year.
She also pointed out that the Government will continue to demand changes in the funding system so that the Balearic Islands don’t contribute the most and receive the least.
IP Spokesperson in Parliament, Lina Pons and Més Spokesperson, Miquel Ensenyat stated that regional funding for the Balearic Islands will be below average next year and called for immediate Government action to combat the situation.
Podemos Spokesperson, Alejandro López said that it’s essential that the Government deploys the Balearic Special Regime or REB to compensate for the disadvantages of the island.