Thursday, November 30, 2023

Poor’s upgraded the outlook for the Community of Valencia rating from stable to positive

Standard and Poor’s improved the rating outlook of the Community of Valencia from stable to positive, considering the more “realistic” approach of the new Government of the region in preparing the budget for 2024 , which eliminates the matter of the acquisition included in the previous Government, and the expenditure control measures adopted and announced for the coming years, as reported by the Ministry of Finance.

The development means that there is a high possibility that the rating of the Valencian Community will improve for a maximum period of two years, although its rating still makes it impossible for it to go to the markets for financing.

Standard and Poor’s also emphasized that the expected increase in income from the financing system for the next year as a result of forecasting the liquidation of the 2022 financial year and the account payments for 2024 will pay for more reduced resources from own taxes such as Inheritance and Donations and the ITPJD, in addition to six new social deductions in personal income tax.

The agency also foresees a moderate increase in spending from 2024 obtained from the application of the new fiscal rules that will soon be approved by the European Commission, the reduction of inflation, the efficiency measures of expenditure announced by the Consell or the forecast of more realistic budgets.

This was stated in the rating report of the Valencian Community published by the rating agency after analyzing the regional debt, a credit rating report limited to high structural deficits and the heavy debt load associated with it as a result of underfinancing .

After learning about this report, the Minister of Finance, Economy and Public Administration, Ruth Merino, indicated that the improvement in the outlook of the Community of Valencia by Standard and Poor’s shows that the Consell will go ” in the right direction.” Merino emphasized that the careful and realistic approach to the preparation of the Generalitat’s Budget for 2024, together with the measures to control spending, sends “a message of confidence about the strict management of public resources to be carried out in this Council”.

However, the head of the Treasury insisted on the need to urgently address the reform of the financial system in the region that has been pending since 2014 because, as highlighted in the Standard and Poor’s rating report, only in this way can the weaknesses be solved. Treasury.

Debt and deficit

The rating for the coming years also takes into account other circumstances such as the expectation that further recurring transfers may occur in favor of the worst financed Autonomous Communities until the pending reform of the financing model takes place, and also the possibility of carrying it. a partial “absorption” of the State, a measure that will ease the financial costs faced by the Community of Valencia in the coming years.

The Valencian debt reached 57,246 million euros at the end of the first half of this year after an increase of 2,213 million in just six months as a result, above all, of the need to spend the excess deficit in 2022, which a total of 3,860 million euros.

The Standard and Poor’s report predicts that the operating deficit in the near future will increase due to smarter financial management and the expectation of more recurring transfers until a change in the financing model occurs.

Regarding the debt, the Valencian Community report explains that the fact that 84% of the debt stock is in the hands of the State reduces the risk of refinancing. In addition, he considered that the debt ratio “could improve” if the central government decided to forgive an “important” part of the debt. Meanwhile, the need for financing and the high amount of debt caused a significant increase in interest payments, the report highlights.

World Nation News Desk
World Nation News Desk
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
Latest news
Related news