In 2021, the institution published the reports linked to the budget cycle, participated in the debate on the future of fiscal rules, created the Public Spending Evaluation Division and a new Advisory Board, among other actions
The Independent Authority for Fiscal Responsibility (AIReF) today published on its website the Annual Report for 2021, a document that it prepares every year and in which it reviews the work carried out by the institution over the previous year. It is published in the context of AIReF’s principle of accountability, which, together with independence and transparency, are key to the performance of its functions. In this case, the Report includes the activity performed in 2021, a year marked once again by the pandemic and the health, social and economic crisis. However, it has also provided elements of optimism thanks to the mass vaccination programme that has allowed a gradual return to normality and the beginning of the economic recovery.
However, as AIReF’s President, Cristina Herrero, notes in a letter included in the Report, the health crisis cannot yet be considered to be over and the economic recovery has not been as vigorous as expected. Added to this is the challenge of the implementation of the Recovery, Transformation and Resilience Plan (RTRP) and the emergence of new factors of uncertainty, such as supply chain disruptions and the price of energy raw materials at historical highs.
In the budgetary area, the fiscal rules continued to be suspended in 2021 and AIReF noted in its report of July 30th that the exceptional circumstances that justify the activation of the escape clause also remained in 2022. As AIReF has indicated on numerous occasions, this does not imply the suspension of supervision. Therefore, last year it issued the mandatory reports linked to the budget cycle and continued to recommend the need to define a medium-term strategy that guarantees the sustainability of public finances. In addition, AIReF contributed to the European Commission’s public consultation on this matter. It was also part of the working group of the European network of Independent Fiscal Institutions (IFIs) that has drafted a proposal on the review of the European fiscal governance framework.
New Division
In 2021, AIReF achieved a key milestone with the creation of the Public Spending Evaluation Division, which represents a step forward in the commitment set out in the 2020-2026 Strategic Plan to promote the evaluation of public policies. This impetus has been possible thanks to the approval of the RTRP. Component 29 of the plan on the efficiency of public spending included numerous commitments in this area. In addition to the creation of the new division, the RTRP included a commitment to start the third and final phase of the Spending Review 2018- 2021, action plan of which was approved in December 2021 and which marks the start for evaluating two public policies over 2022: public sector financial instruments to support productive sectors and urban waste management.
In 2021, work was also carried out on the proposals for possible subjects to be evaluated in the future, after the RTRP consolidated AIReF’s evaluation activity with the commission of a new Spending Review 2022–2026. Component 29 also contains a commitment to integrate evaluation into the budget cycle by, for example, creating a unit for following up proposals made in public policy evaluations that will encourage decision making based on objective data.
In 2021, work also began on carrying out a study on international financial cooperation for development and several evaluations were carried out at the request of the territorial administrations.
Transparency
To strengthen transparency – one of the guiding principles of AIReF’s activity – the institution began publishing the macroeconomic forecasts in 2021, which may be consulted in an Excel format on the website, as well as the data used in the evaluation studies of the Spending Review. Along the same lines, AIReF published a technical paper on IFIs, their current situation and proposals for reform and a work plan was announced for drawing up the Opinion on the Minimum Living Income. In 2021, AIReF also published the Opinion on Fiscal Transparency in the General Government in Spain.
In addition, with the aim of making AIReF a useful institution for the General Government and for society in general, a workshop was held in December which, for the first time, brought together representatives of all tiers of government to share and exchange experiences. AIReF also organised a technical seminar with the Autonomous Regions on macroeconomic forecasts with the aim of collaborating in this area in the current highly uncertain environment.
Appearances before Parliament
In addition, in compliance with the principle of accountability, AIReF’s President appeared on three occasions in the Congress and the Senate, in the Finance and Budget Committees, to report on the 2021-2024 Stability Programme Update, on the Draft 2022 General State Budget and on the Budgetary Plan.
In 2021, AIReF established a new Advisory Board comprising people of recognised prestige for a renewable period of two years, thus fulfilling another of the President’s commitments. This Advisory Board is established with a renewed character, seeking ongoing collaboration between its members and AIReF to provide support in specific matters in the area of specialisation of its members.
In short, 2021 was a year of intense activity for AIReF, marked by the start of the recovery and the unprecedented arrival of European funds. “All this will require a special effort to consolidate economic growth, without losing sight of the sustainability of public finances,” concludes the President.