The President of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, took part today in the 3rd Actuarial Conference, organised by the Institute of Actuaries, where she highlighted the need to make progress in the analysis, quantification and management of fiscal risks, especially in a context of growing complexity and global uncertainty.
In her speech, Cristina Herrero underlined the main conclusions of the First Opinion on Fiscal Risks published by AIReF back in March, a commitment included in its 2020-2026 Strategic Plan. In her words, this initiative was designed with the aim of incorporating a more strategic vision into the analysis of fiscal sustainability, given the evidence of the increasing frequency and intensity of various types of shocks — economic, environmental and legal — and the realisation that the current system has room for improvement.
This First Opinion identifies and analyses three main groups of risks: macroeconomic, environmental and legal actions against the State. It also evaluates the main instrument for mitigating these risks: the Contingency Fund.
The President particularly focused on the analysis of environmental risks, centring on the frequency and scope of this type of risk and the institutional framework for responding to them. In this regard, she highlighted the statistical dispersion and deficiency and estimated the total cost of this type of risk at more than €11bn for the period 2005-2023. She stressed the need to improve the quantification of these risks by specifying the remediation costs in the budgets and creating a database based on budgetary execution data. In addition, AIReF proposed that the Central Government and the Autonomous Regions draw up and publish their own strategies, in the absence of a national strategy.
Cristina Herrero also announced that the next Opinion will address other significant risks, such as financial risks, those associated with public enterprises and those stemming from public guarantees, with the aim of constructing a comprehensive vision that strengthens the resilience of public finances in the medium and long term.
Lastly, she recalled that AIReF does not analyse factors such as ageing or climate change in this Opinion, which affect public finances but which AIReF considers to be pressure factors and incorporates into its central long-term projection scenario. In fact, in March AIReF also published its Second Opinion on the Long-Term Sustainability of the General Government, in which it emphasises that ageing and growth constraints obviously have a cumulative adverse impact on public accounts, not only through pensions, but also through spending on healthcare.
