- AIReF issued 15 recommendations in the third quarter of 2025 relating to the application of the Stability Law, the adoption of measures to ensure compliance with the expenditure rule and the enhancement of transparency
- Government bodies are required either to follow AIReF’s recommendations or to explain the reasons for departing from them
- The Government has departed from the recommendation to submit an Economic and Financial Plan in response to the central government’s breach of the expenditure rule in 2024, arguing that the deviation was a one-off and exceptional occurrence
- AIReF has updated its interactive tool, which enables users to track recommendations, with the information for the third quarter
The Independent Authority for Fiscal Responsibility (AIReF) today published on its website the monitoring report on the recommendations issued to General Government in the third quarter of 2025, a period in which it put forward 15 recommendations relating to the application of the Stability Law, the adoption of measures to ensure compliance with the expenditure rule and greater transparency. These recommendations are governed by the comply-or-explain principle, under which Government bodies must either follow them or set out the reasons for departing from them.
Given that the same recommendation may be addressed to more than one government body, a total of 42 recommendations were issued in the third quarter: 12 to the Ministry of Finance (MINHAC), 18 to the autonomous communities and 12 to local governments.
Application of the Stability Law
AIReF recommended that the Central Government submit an Economic and Financial Plan (EFP) following its breach of the expenditure rule in 2024. The Ministry departed from this recommendation, arguing that the breach was a one-off event linked to extraordinary and temporary expenditure, and that compliance should be assessed in light of the structural effort made in recent years. However, AIReF considers that the legislation does not provide for any exception based on the extraordinary or temporary nature of expenditure that would allow central government to forgo submitting an EFP in the event of non-compliance. It also notes that the Ministry required the Autonomous Regions that breached the rule in 2024 to submit EFPs, without applying this interpretation.
AIReF also recommended that the procedures to submit the Draft General State Budget (PGE) be initiated as soon as possible and that budgetary stability and public-debt targets be proposed that are mutually consistent and aligned with Spain’s European commitments. Although the Ministry indicated that it was working towards this, the budget has not yet been submitted, although the Government has announced its intention to present it in the first quarter of 2026. As for the targets, the Government approved them on 18 November; they were rejected by Parliament on 27 November and then approved again by the Government, in the same terms, on 2 December. However, these targets are not internally consistent and do not ensure compliance with European commitments.
AIReF also reiterated the need to use the transposition of the Directive on national fiscal frameworks as an opportunity to develop a coherent, consistent and effective medium-term budgetary framework. Although the Ministry indicated that it is reviewing the current legislation, it informed the European Commission that it does not consider it necessary to amend the Stability Law — a position that AIReF does not share. So far, the Government has approved two Royal Decrees addressing specific issues, but AIReF believes that the transposition provides an opportunity to remove the divergences between the national and European frameworks, as it noted in the opinion it published on this matter.
Measures to ensure compliance with the expenditure rule
In July, AIReF recommended that the Ministry of Finance activate the preventive measures set out in Article 19 of the Stability Law for the Canary Islands and for the City Councils of Murcia, Palma and Las Palmas de Gran Canaria, given the risk that these government bodies may breach the expenditure rule in 2025. The Ministry replied that it already conducts continuous monitoring, but it did not activate the measures proposed by AIReF. AIReF considers that early action would increase the likelihood of compliance.
AIReF also recommended strengthening oversight and coordination to ensure that the General Government complies with both the national and the European expenditure rule. The Ministry of Finance noted that net primary expenditure grew by 4.1% in 2024, compared with the 5.3% set out in the Medium-Term Structural-Fiscal Plan, and stated that it already maintains effective fiscal coordination with all General Government. However, AIReF considers the response incomplete, as it makes no reference to compliance with the national expenditure rule.
At the local level, AIReF recommended that Arcos de la Frontera, Barbate, Maracena, Parla, Jerez de la Frontera, Los Palacios y Villafranca and Los Barrios close their 2024 accounts if they had not yet done so, and approve an EFP in the event of non-compliance. It also urged all of them to adopt measures to avoid running a deficit in 2025 and to comply with the expenditure rule. In addition, AIReF recommended that Córdoba, Algeciras, Jaén, Arganda del Rey and Ayamonte closely monitor budget execution and take action if needed. All of them — except Parla, which did not respond — committed to complying with the recommendations. AIReF also recommended that the Ministry of Finance, as the supervisory authority for Arganda del Rey, and the Autonomous Region of Andalusia, as the supervisory authority for Córdoba, Algeciras, Jaén and Ayamonte, monitor the situation. Both committed to doing so.
With regard to the Autonomous Regions, AIReF recommended that the EFPs arising from breaches of the expenditure rule in 2024 include specific measures, a timetable, and balance- and debt-path estimates consistent with the reference rates. This recommendation was issued to the Chartered Region of Navarre, Madrid, Galicia, Castile and Leon, the Balearic Islands, Aragón, the Valencian Community, La Rioja, the Principality of Asturias, the Basque Country and the Region of Murcia. The same recommendation was addressed to Catalonia and Cantabria, but AIReF asked these regions to set out the measures planned in greater detail. Three Autonomous Regions committed to partial compliance (Catalonia, the Valencian Community and Madrid), five departed from the recommendation (the Principality of Asturias, the Balearic Islands, Galicia, the Region of Murcia and the Chartered Region of Navarre) and the rest complied. However, AIReF still sees a risk — to varying degrees — that many Autonomous Regions may breach the expenditure rule in 2025 and/or 2026, a risk that could be reduced by making use of the possibility of undertaking financially sustainable investments under Royal Decree-Law 15/2025.
Transparency
Finally, AIReF issued two recommendations to the Ministry of Finance in the area of transparency. First, it called for the publication of detailed information on the Security and Defence Plan to allow an adequate assessment of its impact. Although the Ministry noted that the plan includes a technical breakdown, AIReF considers that the information provided is insufficient to estimate its annual effect in national-accounts terms. Second, AIReF recommended amending the Order governing information-submission obligations so that the update dates for Local Government data reflect the most recent available information. The Ministry replied that it already publishes an annual calendar, but AIReF considers that this mechanism does not remove the need to revise the Order.
