Overview

• After 12 PP-governed regions left the CPFF meeting in protest, the government pressed on with the draft law enabling a large-scale regional debt write-down.
• The measure is optional for regions, uses adjusted population to allocate relief, and guarantees at least a 19% cut; estimated allocations include Andalusia (€18.791bn), Catalonia (€17.104bn), Valencia (€11.211bn) and Galicia (€4.010bn).
• The anteproyecto and Spain’s fiscal watchdog AIReF state that interest savings from the operation cannot be used to increase regional spending, contradicting public claims from Sánchez and Montero.
• PP-led governments publicly reject the plan as unfair mutualisation and say they will study or pursue court challenges, with Galicia among those preparing legal action.
• Implementation still requires bilateral agreements and parliamentary approval, with the government signaling a formal bill later this year and potential enactment next year.