The role of public sector enterprises in Spain: Room for a shadow government?

Resum

The main objective of this paper consists of analyzing regional public sector enterprises (PSEs) in Spain. We provide a general overview of Spanish Autonomous Communities "(ACs) financial resources in the context of the Stability and Growth Pact and Budgetary Stability Act. From 2002, such regulation imposes several constraints on ACs" indebtedness. We investigate the role of PSEs as an alternative to traditional debt mechanisms given that, in line with Eurostat criteria, PSEs debt can be taken off the public sector's consolidated budget. Descriptive and econometric results confirm our expectations. ACs have used public enterprises to avoid the stringent financial rules. Additionally, it seems that low productivity ACs are accumulating more public debt outside the scope of consolidation.