The Ministry of Finance and Public Function only implemented 36% of spending improvements that the Independent Authority for Fiscal Responsibility (AIReF) has proposed in the framework of the evaluations of the ‘Spending Review’, the mechanism through which the studies commissioned by the Central Administration to the supervisory authority are structured. This percentage affects a set of one hundred proposals that are valued at 21,870 million euros of public spending. In total, the Tax Authority has formulated 277 proposals that affect a total of 81,000 million euros of public spending.
The president of AIReF, Cristina Herrero, has stressed that an evaluation of spending policies based on the effectiveness and efficiency approaches is essential to be able to have quality public finances within the new fiscal framework in which the Union works European. It is, in a context of high inflation rates and exhaustion of favorable monetary conditions due to the rise in interest rates to cope with it, while the country faces challenges that will put upward pressure on public spending in the coming years, such as ageing.
These challenges, he stressed, Spain assumes “with public finances in a situation of vulnerability”, as the deficit and debt are well above what is established in the Stability Pact -and despite the fact that fiscal rules remain suspended until next year-. From Herrero’s point of view, in the absence of additional measures it will be difficult to lower the deficit to GDP ratio of 3% and the debt ratio will remain above 100%. “It is necessary to create fiscal spaces that give us room to react to possible future shocks,” he remarked.
Herrero has influenced that there is a decrease in the amounts assessed by the body through the ‘Spending Reviews’, despite the fact that in the Recovery, Transformation and Resilience Plan the Government had promised to provide these analyzes with permanence. On the other hand, the agency notes a growing interest on the part of the autonomous communities, which are making more and more orders related to transversal policies, such as those related to Health and Education.
The Ministry of Finance promised to follow up on the proposals made by the agency, however at this point there is also “a long way to go”, since evaluations such as the Minimum Vital Income are being left out. There are, specifically, a total of 38 AIReF recommendations to the Central Administration on which no follow-up is being carried out.
Spain can stick to the 3% deficit in 2026
The data have been released during the act to account for the work of the Evaluation division and to present the new interactive Observatory that it has launched to facilitate the monitoring of the findings and proposals that the organization formulates in its evaluations . In this context and questions from the media, the president of AIReF, Cristina Herrero, has trusted that Spain will be able to stick to the goal of 3% deficit that the European Commission will impose on countries by 2026, a consolidation that seems “reasonable” to him and to which he believes that the disappearance of some of the measures that were approved to deal with the Covid pandemic and the inflationary crisis will help.
“We have been saying for some time that the bull was going to catch us” and that the fiscal rules would return, he pointed out, and the Government responded that there is a lot of uncertainty and that planning could not be done. He has advanced that in the next few days the Authority will publish an opinion on the sustainability of public finances in the long term, focusing on the demographic pension, which serves to give an idea of the magnitude of the adjustment that is going to imply fulfilling the commitments with Brussels. “It is to be assumed that the Recovery Plan and the reforms will have an effect on productivity and growth”, he has ruled, while stressing that in order to define a fiscal strategy and be clear about the magnitude of the necessary adjustment, it would be necessary to with a base scenario of where the current situation takes us in the absence of measures.
