SANTA CRUZ DE TENERIFE, 25th May. (EUROPA PRESS) –
Standard & Poor’s has acknowledged the Autonomous Community of the Canary Islands for its stable long-term outlook and has decided to maintain its credit rating at ‘A’. This recognition is attributed to the archipelago’s firm fiscal performance, declining debt levels compared to the national average, and a remarkably strong liquidity position.
As announced by the Ministry of Finance of the Canary Islands Government, this rating represents the highest achievable for the autonomous community, given that it cannot surpass the State’s rating. This places the Canary Islands among the administrations with the best credit ratings.
The credit rating of an autonomous community evaluates its financial strength and ability to fulfil financial obligations. The ‘A’ rating assigned to the Canary Islands reflects a robust capability to meet its financial commitments. Initial projections indicate a real GDP growth of 3.9% in the Canary Islands in 2023, exceeding the national average of 2.5%, indicating a strong recovery in the region’s tourism sector.
The credit agency has commended the prudent approach of the Government in dealing with uncertainties such as the absence of central government budgets for 2024, the potential absorption of regional debt, and the implementation of new fiscal regulations. The Canary Islands’ decision to formulate a 2024 budget with conservative revenue estimates and a zero deficit demonstrates their commitment to fiscal consolidation.
Furthermore, it is estimated that the islands’ debt burden has decreased to approximately 67% of consolidated operating income in 2023 – down from a peak of 122% in 2015 – and is predicted to reduce further to around 54% by 2026. The Canary Islands boast one of the lowest debt-to-GDP ratios among Spanish regions, standing at 12.2% by the end of 2023 compared to a national average of 22.2%. The exceptional liquidity position is also highlighted.
Standard & Poor’s forecasts a slight decline in operating balances in 2025 within a less favorable revenue environment, remaining above 7% of operating income and stabilising in 2026.
The report underscores the increasing pressure on the Canary Islands to manage the growth of healthcare expenditure, a challenge faced by all Spanish regions. However, there has been an increase in budget allocations for healthcare facilities in 2024, making the budget more realistic and helping to avert overspending that could adversely affect overall outcomes.
Moreover, there has been an enhancement in the CAC’s individual credit profile, moving from ‘a+’ to ‘aa-‘, surpassing the long-term rating.
