- The President of the Independent Authority for Fiscal Responsibility (AIReF) believes that a “country agreement” is necessary to ensure compliance with the new fiscal rules and to allow for challenges such as ageing, debt reduction and climate change, among others, to be addressed
- She warns that the public deficit will stagnate at 3% of GDP in the medium term and that debt will stabilise at above 100% of GDP, thus placing public finances in a vulnerable position
- In the long term, debt will resume an upward path, driven by the effect of the ageing population in such items as pensions, healthcare and long-term care
- Cristina Herrero stresses the need to address the sustainability of public finances with an integral approach from all the General Government sub-sectors and stresses the need to start planning as soon as possible
- She asserts that one of the challenges facing the institution is to consolidate its evaluation function and hopes to reach a unanimous agreement with the political groups to reform the Organic Law of AIReF
- AIReF may be an uncomfortable body due to its supervisory work, but it must be a benchmark in objective and independent analysis at a fiscal and economic level and in evaluating public policies
The President of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, in statements distributed by the institution, asserts that Spain is in a “vulnerable” situation that “makes it imperative to reach the broadest political consensus possible” to address the sustainability of public finances. In these statements, she stresses the need to reduce the level of public debt and reviews the main challenges in regard to sustainability, regarding which she highlights the impact of the ageing population on pensions, healthcare spending and care-giving, along with the ecological transition and international commitments, among others.
Cristina Herrero considers that it would be advantageous to reach a “country agreement” to comply with the demands of the new fiscal framework currently being debated in the European Union, which will foreseeably require countries to draw up medium-term debt reduction plans. “The success of this framework will depend on the success of the parties and this requires a commitment from all parties and all tiers of government”, she stated.
The President warns that the deficit will stagnate at 3% of GDP in the medium term and debt at 100% of GDP if measures are not taken to prevent this, which would place the Spanish public finances in a vulnerable position. And in the long term, debt will start to rise again due to the effect of the ageing population on such items as pensions, healthcare and long-term care.
As regards the future of pensions, the President stresses the importance of not simply making partial analyses and of addressing the sustainability of the accounts through an integral approach even through sector analyses are also clearly necessary. “I always like to state that there is only one blanket and it needs to cover everything. If more blanket is required to cover a certain sector or field, we can either make it bigger or somewhere else needs to be made smaller”, she underlined.
PLANNING TO ENSURE SUSTAINABILITY
Cristina Herrero also stresses the importance of starting the planning process as soon as possible to guarantee the sustainability of public finances. In fact, the imminent return to fiscal rules makes this planning imperative. “We should have taken advantage of these years to start to take stock of the fact that, first of all, planning is always necessary. And second, that the new framework of fiscal rules means that this planning cannot be delayed any longer. If anything characterises the new framework of fiscal rules, it is that we must tackle the situation of public finances from a medium-term perspective. And this requires planning”, she argues.
In these statements, Cristina Herrero also reviews the role that AIReF plays in society, and the challenges it faces as an institution. She recalls that AIReF is, first and foremost, a fiscal supervisor that must guarantee the sustainability of public finances. It also plays an important role in the evaluation of public policies, which is key to ensuring greater efficiency and efficacy in the management of public revenue.
REFORM OF THE ORGANIC LAW OF AIReF
With a view to the future, she stresses that one of the challenges facing the institution is to consolidate this evaluation work by means of a reform of the Organic Law of AIReF to provide this function with the stability and resources it requires. According to Cristina Herrero, a cross-party agreement to reform this law is possible, given that evaluation is always necessary but, in the case of Spain, it is “pressing”. “I would like to think that in the same way as my appointment was backed unanimously in Congress, why couldn’t unanimity be achieved in a reform of the Organic Law of AIReF?”, she states.
When asked if she would like to extend her term in office, Cristina Herrero stated that “personally”, she could not find a better place than AIReF for her professional development, although from an objective perspective, as the institution always requires, she considers it positive if this term in office is not allowed to be extended. In fact, she recalls that this is one of the principles that ensures the institution’s independence, along with its specific form of financing – through a fee – and the fact that the appointment of the president requires an absolute majority of Congress to be ratified.
AIReF – A BENCHMARK IN THE ANALYSIS OF FISCAL POLICY
Although she acknowledges that AIReF may be an uncomfortable body for those under supervision, she feels that the frictions between supervisor and those under supervision are “natural and desirable”, and that she imagines the institution in a few years as a consolidated body that is a benchmark in objective and independent analysis in the fiscal and economic debate and in the field of evaluation. She also believes it will be a fundamental pillar of Spain’s democratic quality.
“In just a few years, AIReF has become a synonym of quality, rigour, objectivity and independence. In the coming years, I would like AIReF to consolidate its position and become a benchmark in objective and independent analysis in the fiscal and economic debate and in evaluation at both a European and a national level. It is often said that the democratic quality of a country depends on the quality of its institutions. I would like to see AIReF as a benchmark institution and a fundamental pillar of this institutional and democratic quality”, she concludes.