The Independent Authority for Fiscal Responsibility (AIReF) published the Main Lines of the Budgets of the General Government Sector 2024 on its website today, along with the individual reports of the Autonomous Regions (ARs) and the individual evaluation report of the Local Governments (LGs). For the LG sub-sector as a whole, AIReF estimates a surplus of 0.2% of GDP in 2024.
AIReF estimates that the LG sub-sector will achieve a surplus of around 0.1% of GDP in 2023, slightly worse than its July forecasts. AIReF has updated the result forecast for year-end 2023 for the LGs as a whole, in light of the most recent information published on non-financial operations in the first half of the year, debt and local deposits in the same period, according to data from the Bank of Spain, along with the information provided by the Information Centre of the Ministry of Finance and Civil Service (MINHAFP) and the information provided by the large LGs and evaluated by AIReF. This balance is in line with the estimates contained in the Budgetary Plan.
For 2024, AIReF forecasts that the LG sub-sector will achieve a surplus of 0.2% of GDP, which coincides with the forecasts contained in the Budgetary Plan. This would imply a 0.1% improvement in the balance compared with 2023, which can primarily be explained by the effect of the positive settlement of the financing system to be received in 2024. However, the expected balance in 2024, refined by the effect of the offsetting of the negative settlement in 2020 and the positive settlement of the financing system would result in a deficit of 0.1% of GDP.
AIReF estimates that the group of large LGs will close 2023 with a surplus of 1.6% of revenue and a surplus of more than 5% of expenditure in 2024, due to the high positive impact of the 2022 settlement of the financing system. 2023 will close with a deficit for the City Councils of Barcelona, Bilbao, Valladolid and Vigo, the Provincial Council of Seville, the Island Council of Tenerife and the Provincial Council of Biscay. The estimated deficits of the City Council of Valladolid, of more than 8% of its revenue, and that of the Provincial Council of Seville and City Council of Vigo, of around 5%, are worthy of mention.
For 2024, AIReF forecasts a surplus for the 25 large LGs although, once refined for the positive effect of the settlements and the offsetting of the financing system, the group would record a deficit. At an individual level, after eliminating the effect of this settlement, the City Councils of Madrid, Barcelona, Valencia, Malaga, Gijon, the Provincial Councils of Barcelona, Valencia and Seville, and the Island Councils of Tenerife and Majorca would record a deficit. This deficit would be higher than 10% of revenue for the Provincial Councils of Barcelona and Valencia.
As regards the medium-term horizon of 2025-2028, AIReF estimates that the LG sub-sector will consolidate an annual surplus of around 0.1% of GDP. This surplus is lower than the surplus consolidated in the years prior to the suspension of the fiscal rules, including 2019, a year that saw particularly intense expenditure. This reduction in the structural surplus of the LG sub-sector is fundamentally determined by the verified growth in the years of the suspension of current expenditure which, due to its recurrent nature, consolidates in the future, without this increase being fully offset by the expected increase in revenue.