The President of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, spoke today at the 12th Castile-La Mancha Economic Forum, organised by the region’s Family Business Association. During her speech, she stressed that growth and fiscal policy are two necessary ingredients for promoting the sustainability of public finances.
Cristina Herrero analysed the impact of the reform of the European fiscal governance framework, approved in 2024, and its implications for Spain. She emphasised that the reform of the Stability and Growth Pact reconciles fiscal sustainability with economic growth by allowing for differentiated strategies by country, extending adjustment deadlines when reforms and investments that drive growth are undertaken, and focusing supervision on a single variable: primary expenditure net of discretionary measures.
The President also highlighted the new framework’s promotion of national ownership, which seeks to ensure that the commitment to sustainability comes from the countries themselves. Countries are responsible for proposing their own fiscal strategies and strengthening the role of independent fiscal institutions such as AIReF.
Although she considered that the broad outlines of the reform are sufficient, she acknowledged that its technical implementation is not straightforward and that the start-up is not meeting expectations. In this regard, she stated that the regulation has not been demanding in terms of national ownership or information quality, which limits its transformative potential.
Good short-term data and long-term challenges
Cristina Herrero also analysed the situation of public finances at the national level. She noted that the Spanish economy is performing positively in the short term, with an upward revision to growth and an improvement in the public deficit, which AIReF forecasts at 2.4% of GDP (excluding measures for the Isolated High Altitude Depression – DANA), below the 3% threshold set in the Pact. These improvements are due to dynamic tax revenue and expenditure behaviour within the margins of flexibility allowed by the EU.
However, she warned that in the medium and long term, significant structural challenges remain, stemming from an ageing population and low productivity. According to AIReF projections for 2050, public expenditure would increase by 6.5 points of GDP, the deficit would reach 7% and public debt would stand at 129% of GDP in a no-policy-change scenario.
Boosting productivity and the quality of public finances
In this context, Herrero stressed the need to promote a new growth model based on productivity and the quality of public finances. To this end, she highlighted the role of European funds from the Recovery, Transformation and Resilience Plan (RTRP) and the Spending Review carried out by AIReF, which seek to improve the efficiency and effectiveness of public policies.
In this regard, she recalled that the institution is preparing an evaluation of temporary disability, analysing its causes, governance and economic effects, with the aim of formulating proposals to improve the functioning of this benefit.
