The autonomous communities have had greater flexibility this year to find how to finance their red numbers. And they have taken advantage of it. The latest statistics from the Ministry of Finance show it black and white: the amount of cheap Treasury loans allocated through extraordinary liquidity mechanisms – whose best-known compartment is the FLA or Autonomous Liquidity Fund – has fallen this year to its lowest level since 2012, when they were launched. At the same time, resources raised in the market have grown by almost 30% this year compared to the previous year. “The mechanisms are being reduced, which was precisely one of the objectives, so that the communities progressively go to the markets,” contextualizes César Cantalapiedra, managing partner of the Public Finance area at the consulting firm Analistas Financieros Internacionales (Afi).
The extraordinary mechanisms are a scheme of cheap Treasury loans that began to operate in the midst of the sovereign debt crisis, with the purpose of avoiding bankruptcy of the most suffocated communities at a time when the risk premium and financing costs in the market were exorbitant. As their last name says (“extraordinaries”) they would have had to withdraw once the storm had passed, but they have ended up becoming normalized over the years as another instrument at the disposal of communities to finance their budget imbalances.
For this year as a whole, the Ministry of Finance has allocated 22,779 million euros in this way. Although the figure is still larger than that captured through the private channel, it has been reduced compared to the nearly 25,000 million last year and is significantly lower than the record of 38,667 million allocated in 2020, the hardest year of the pandemic. If we add the other liquidity measures that are no longer in force, such as the ICO lines to finance debt maturities or advances charged to the financing system, the maximum was reached in 2012, with 49,120 million euros.
Andalusia, which until last year had combined private investment with mechanisms, has chosen in 2026 to go exclusively to the markets to borrow, joining other territories that took this path a long time ago: Madrid, Galicia, Castilla y León, Asturias and the regional communities of Navarra and the Basque Country—the latter two never took advantage of cheap loans from the State. The other novelty of this exercise is that Castilla-La Mancha, the Balearic Islands, Aragon, Extremadura, Cantabria and La Rioja, which used to be financed exclusively through extraordinary mechanisms, have also gone out to seek private resources, combining both financing channels.
In total, the communities have raised more than 15,290 million in the market this year, half concentrated in Madrid (3,823 million) and Andalusia (3,819), according to data provided by Afi. This amount has not only increased compared to 2025, but it already represents 40% of the nearly 38,000 million that the autonomies have needed as a whole to cover the financing needs of the year, especially debt maturities. Just two years ago, in 2024, the contribution of private investors was much smaller: it accounted for 26% of the total.
Alejandro Rodríguez Anglada, director of Sovereign and Public Finance at S&P Global Ratings, corroborates that the lower weight of extraordinary mechanisms is due to a growing use by the autonomous communities of market instruments such as loans from banks and multilateral entities, or bond issues and private placements. “It is in line with our expectations,” he assures, “and with the guidance given by the central government to the communities in this regard.”
Last year, the Government restricted access to the FLA, keeping active only the Financial Facility compartment – a line of loans with less demanding conditions – and making the criteria more flexible so that communities could go to the market. The decision, forced by the impossibility of approving a new path of stability in Congress, was intended to be a step prior to the disappearance of the mechanisms contemplated in the bill to partially eliminate the regional debt. According to the initiative, which has been left up in the air due to the early elections, the FLA would have had to become a mere network of last resort in 2029.
Regardless of what happens with debt forgiveness and if the situation does not go wrong, S&P Global believes that the amount of resources raised in the markets by communities will continue to increase, as indicated by the multi-year debt plans of most of them. And it is positive news. “We see the progressive exit to markets as a symptom of normalization in the financing mix of the communities,” assesses Rodríguez Anglada.
Cantalapiedra, from Afi, shares the forecast: “Now there is a clear conviction that we have to go to the market.” The situation also helps: despite the fact that the cancellation of regional debt is stuck and public spending is pushing upwards, the sustained rates of collection and the containment of the deficit are allowing Spain to finance itself with better conditions. "Although the context is not going to be so favorable, because interest rates are rising after many years of low rates, we are not seeing problems when it comes to attracting financing. There has been ease of placement and good receptivity," he details.
Half a billion euros
Since the extraordinary mechanisms and other liquidity measures were put in place in 2012, regional governments have accessed more than half a billion euros in this way to pay their suppliers, finance their deficit and, above all, pay for their debt maturities, although with a very different intensity depending on the territory. The autonomies that have made the most extensive use of this financing channel are Catalonia and the Valencian Community, which are also the regions with the highest liabilities and the highest debt-to-GDP ratio on the entire map.
Almost 80% of the loans that the State has arranged for the whole of 2026 have gone to these two autonomies - 9,216 million to Catalonia and 8,717 to the Valencian Community - which are also the ones that have the most difficulties, along with Murcia, to make new issues in the market due to the magnitude of their red numbers.
This lower use of private capital is also explained by the greater restrictions they have had. Before the Government made financing criteria more flexible this year, only the autonomies that complied with the fiscal rules – respecting the debt and deficit objectives, the spending rule and the payment period to suppliers, among others – could combine extraordinary mechanisms with the market. The others had to choose one channel or another. The relaxation carried out in 2026 allows all communities without a deficit and with debt less than 19.5% of their GDP to combine the two routes, a requirement that only Catalonia, the Valencian Community and Murcia fail to meet: due to having the most worn-out accounts, they were only allowed to capture a maximum of 10% of their annual needs on the market.
According to Rodríguez Anglada, from S&P Global, it is likely that different options will coexist in the future, with communities that make greater use of the mechanisms and others that bet more decisively on the markets. “Each community will take into account the volume of resources to be raised, the appetite of investors at any given time and, therefore, the prices at which it can be financed, compared to the alternative mechanisms.”
