Change in trend for the first time in a decade: at the end of 2021, the debt of local entities as a whole experienced the first rise since the Great Recession. The rise, of 0.54%, has pushed the liabilities of City Councils, Provincial Councils, Councils and smaller entities to 22,068 million. The variation, although slight and far from the maximum reached during the financial crisis, has twisted the course of Administrations that had been exemplary in terms of budget balance. Since 2012 they had been lowering their debt by hitting a surplus. In fact, 4,812 of the 8,131 municipalities in Spain closed 2021 without debt despite the pandemic. In the following map you can consult the debt data and the change in the last year, municipality by municipality, according to the data published by the Treasury.
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The virtuosity of the City Councils is actually the result of a forced adjustment launched after the serious financial crisis of 2012, when the Budgetary and Financial Stability Law came into force. The EU forced Spain to reduce its bulky Red numbers, introducing a corset that would keep spending under control. To this must be added the structure of the local financing system, since the taxes collected by the municipalities (IBI) are less sensitive to the economic cycle. The result has been reflected in the statistics: local corporations have lowered their debt at an average annual rate of 8% since then.
The arrival of the pandemic, however, has forced a greater effort and, above all, has led Brussels to approve an escape clause that allows the fiscal rules to be frozen. The municipalities have also benefited from this suspension, which after a struggle with the Treasury have managed to relax the rule that requires setting a ceiling above which they cannot spend.
The one that has remained unchanged is the list of the most indebted municipalities based on their population. They are again carried out by smaller towns. This indicator is more reliable of municipal management and the health of public accounts compared to the total debt, which is always higher in larger cities for a more than logical reason: the larger the size, the higher the budgets are handled by their mayors. .
The small town of Vallada repeats at the top of the list of municipalities with the most debt per capita, despite a slight reduction in its red numbers. Each of its 3,092 inhabitants owed a whopping 9,121 euros as of December 31, 2021. This figure has dropped by just seven euros compared to the previous year, after this small Valencian town saw its debt gain more than 30 % since 2019. Behind these bulging Red numbers there is a frustrated dream: to create an inland sea with a nautical park in this inland town, which is 70 kilometers from the nearest port. The project did not see the light, as well as successive plans to replace it, despite the fact that the council had already acquired 1.3 million square meters of land.
Navajas (Castellón) also repeats as the second most indebted municipality in Spain per inhabitant, despite having reduced its liabilities by 6% in the last year: each of its neighbors accumulated a debt of 7,691 euros at the end of 2021. This municipality of 750 inhabitants, which before the arrival of the pandemic occupied the first place on the list, was fattening its budget gap during the more than 20 years of mayorship of José Vicente Torres (PP), who was in charge of the consistory until 2015.
The podium is closed by Los Barrios (Cádiz), which has dethroned Moraleja de Enmedio (Madrid) as the third municipality with the highest debt per inhabitant in Spain. Each resident of this town owes 7,319 euros, 7% more than the previous year.
However, the small municipalities of Huévar de Aljarafe (Seville), Plasenzuela (Cáceres) and Almohaja (Teruel) are the towns that increased their debt per capita the most in the last year and, together with Barbate, since the pandemic. The first raised its liabilities by more than 5,500 euros in 2021 compared to 2020, reaching fifth place on the list of towns with the most debt. The others increased their debt by almost 3,000 euros per capita each. The town of Grajera is located at the other extreme. This municipality of only 245 inhabitants is the one that lowered its debt per inhabitant the most in 2021, from 4,630 euros to zero.
If we look at medium and large cities, Navalcarnero is the municipality with between 25,000 and 50,000 inhabitants with the highest debt per capita, 3,729 euros per inhabitant. In this group, Totana (Murcia) or the Cadiz-based Puerto Real and Arcos de la Frontera also stand out. Among the largest cities, with more than 100,000 inhabitants, Jaén and Jerez de la Frontera stand out, with more than 4,000 euros of debt per resident.
In absolute terms, Madrid is the municipality with the greatest gap, with 1,679 million euros. Despite the high figure, the capital has carried out an intense restructuring of its accounts, which has allowed it to reduce its liabilities from the more than 7,000 million it owed in 2012 – in 2021 it also reduced the gap, by 270 million. It is followed on the list by Jerez de la Frontera, in Cádiz, with a negative balance of 918 million —118 more than in 2020—, equivalent to 4,312 euros per inhabitant, and Barcelona, with 817 million, 16 million more than the previous year.