It is one of Spain's smallest regions, with a population of just over 2 million, but it managed to pile up debts of as much as 6.6 billion euros ($8.08 billion) by the end of 2011, making it the sixth most heavily indebted of the country's 17 regions.
The president of Castilla La Mancha inherited the steepest deficit of all of Spain's semi-autonomous regions at 7.3 percent of gross domestic product (GDP) for 2011. Now she is trying to get the deficit down to 1.5 percent of GDP this year.
Maria Dolores de Cospedal has implemented an ambitious program of cuts, which have brought some unpleasant side effects.
Unemployment has increased by 5 percent over the last year to 27 percent. Growth has slumped and was down 1.8 percent in the first quarter in the region.
De Cospedal, who is also Secretary General of Spain's ruling conservative Popular Party (PP) says these measures are necessary to boost growth and improve access to finance for businesses in the region.
"Austerity measures are always unpopular measures...this is what the PP has to do. Today the government of Spain cannot think about winning elections. They have to rule the country, even if that has an important cost," she told CNBC.
The reforms have earned her a Facebook page called "hating Cospedal". The cuts included privatizing hospitals, closing schools, and extending the working week in the public sector.
The region, home of the fictional Don Quixote, is reliant on agriculture (though its dominance in that industry has declined somewhat) as well as tourism. Around 95 percent of the businesses in Castilla La Mancha are small enterprises.
De Cospedal hopes that the painful measures she has introduced will help the region's businesses, which have suffered from a lack of access to funding.
"When we say we have to grow, the first thing we have to do is achieve better funding and financing, which is something you can't do when the deficit is too high because no one will give you loans or the loans will have high interest rates," she said.
Luis Miguel Valle from the Chamber of Commerce in Toledo, the region's capital, agreed that the businesses in the region were facing a liquidity problem.
"The problem is banks. Banks don't allow money to flow. And credit is necessary for enterprises," he told CNBC.
He said businesses in the region had closed in the last year due to cashflow issues, rather than a lack of customers.
"It will take time to see the changes (to support growth in the region)," he said, but he conceded that the region had recognized it was overspending and that it needed to face changes in the global economy.
"We have to face the global change because ten or 15 year ago we were producers. Now we don't produce anything because it all comes from China. We have to face this new challenge," he said.
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