Is Spain really going to write off part of its debt?

On February 26, 2025, the Spanish government announced a debt relief measure in favor of the autonomous communities, amounting to €83.3 billion . The central government will absorb this debt adding to its existing debt. This should be seen as a debt reshuffling within the government and will not impact in any way the private sector. This unprecedented action in the history of the Kingdom of Spain would allow the autonomous communities to reduce their debt burden, thereby facilitating their access to financing . Andalusia would be the biggest winner of this measure, with a debt relief of €18.8 billion, which would halve its current debt-to-GDP ratio. Although this proposal still needs to be approved by the Congress of Deputies, where the current government does not have a majority, it will, however, have no impact on the perception of financial markets regarding Spain's credit quality .