- The institution builds on the pioneering analysis of fiscal risks launched in 2025, which already addressed macroeconomic, environmental and legal risks, as well as the Contingency Fund as a mitigation tool
- The new Opinion incorporates the use of MEGAIReF to analyse the impact of macroeconomic shocks on public accounts
- It updates the quantification of the fiscal cost associated with natural disasters and other exceptional events, which it places at EUR 65.085 billion between 2005 and 2025, and presents an interactive tool for consulting this information
- It incorporates new information on court rulings in 2024 and 2025, with an impact on the deficit of over EUR 14.4 billion
- AIReF analyses public guarantees as contingent liabilities that do not necessarily entail an initial outlay, but that may generate a fiscal cost if they are called, paying particular attention to the COVID-19 guarantees arranged through the ICO
- It analyses more than 1,600 public enterprises for the first time to assess, preventively, the risk of sector reclassification and its potential impact on the deficit and debt, after finding that in the last 15 years more than 60% of the entities analysed have gone from not consolidating within General Government to doing so
- It finds that the Contingency Fund continues to be used for expenditure that is not unforeseen: in 2025, this accounted for slightly more than 71% of the total
- The Opinion sets out proposals to improve the information available, strengthen transparency, anticipate impacts and move towards better management of fiscal risks
The Independent Authority for Fiscal Responsibility (AIReF) today published on its website its second Opinion on fiscal risks, in which it deepens the analysis launched in 2025 on macroeconomic, environmental and legal risks and broadens its scope to two new areas: public guarantees and public enterprises. AIReF makes proposals in each area to improve risk management and reiterates the case for preparing a comprehensive fiscal risk report that identifies the main risks, assigns probabilities of materialisation, quantifies their impact and incorporates a mitigation strategy. This report should also be integrated into budgetary planning instruments, such as the Medium-Term Fiscal-Structural Plan, its updates, the General State Budget and the Draft Budgetary Plan.
In 2025, AIReF published its first Opinion on fiscal risks, a pioneering analysis in Spain focusing on macroeconomic risks, environmental risks, legal actions against the State and the Contingency Fund as a mitigation element. In this second Opinion, the institution consolidates this line of work, updates and expands the results and incorporates the analysis of new risks that may affect budgetary stability and the sustainability of public finances: public guarantees and public enterprises.
The Opinion uses the definition in the Fiscal Transparency Manual of the International Monetary Fund (IMF), which considers fiscal risks to be factors that may cause fiscal outcomes to deviate from those expected or forecast.
Macroeconomic risks
In the macroeconomic sphere, AIReF expands the analysis of the historical materialisation of shocks and their potential impact on public accounts. To this end, it uses MEGAIReF, the Dynamic Stochastic General Equilibrium model—DSGE—developed by AIReF together with Pompeu Fabra University. This model makes it possible to analyse, coherently and comparatively, the effects of four shocks that are relevant for the Spanish economy: tighter financing conditions, deterioration in the external environment, higher energy prices and an increase in labour supply.
The analysis shows that macroeconomic shocks have been relevant in explaining the evolution of GDP per capita and that their impact may feed through to fiscal variables. AIReF therefore considers it necessary for fiscal planning to incorporate sensitivity analysis and scenarios that make it possible to assess potential deviations from the central forecasts. In this regard, it proposes incorporating forecast-error analysis and quantifying the macroeconomic risks underlying macroeconomic and fiscal forecasts through sensitivity analysis and stochastic projections.
Environmental risks and new interactive tool
The Opinion updates and expands the analysis of environmental risks associated with natural disasters. These risks generate unforeseen fiscal costs mainly through two channels: damage repair and support measures for those affected. AIReF notes that environmental risks frequently materialise in Spain through droughts, wildfires, floods and weather events. Geophysical and biological risks, by contrast, are less frequent.
It also notes that their cost is significant. Specifically, it estimates that the cumulative fiscal cost of the main natural disasters and other exceptional events analysed amounted to EUR 65.085 billion between 2005 and 2025, at 2023 prices. This figure includes expenditure on emergency works and aid for those affected (EUR 16.5 billion), compensation from the Insurance Compensation Consortium (CCS) for hydrological, meteorological and geophysical risks (EUR 12.8 billion at constant 2023 prices) and other response costs, such as those associated with the COVID-19 pandemic, with a cost of over EUR 35 billion. In particular, the impact of the Valencia DANA in October 2024 would have amounted to more than EUR 8 billion in applications of the Contingency Fund and other measures, in addition to around EUR 4.2 billion in CCS compensation.
To improve the analysis of these risks, AIReF proposes improving sources of information on natural disasters, making their fiscal cost explicit in budgets, creating a database of the fiscal cost of natural disasters and preparing public strategies for managing these risks in both Central Government and the Autonomous Regions. Together with the Opinion, AIReF is making an interactive tool available to the public that allows users to consult the fiscal cost associated with natural disasters. The tool allows users to navigate by type of risk and consult the destination of the associated public expenditure, such as infrastructure repair, aid and subsidies for those affected, or compensation.
Legal actions against the State
AIReF also updates the analysis of risks arising from legal actions against the State, incorporating court rulings for 2024 and 2025, which had a combined impact on the public deficit of over EUR 14.4 billion. Specifically, the effect amounted to more than EUR 11.2 billion in 2024, 0.7% of GDP, and EUR 3.1 billion in 2025, 0.2% of GDP. Most of this impact was concentrated in Central Government, although it also affected the Social Security Funds and Local Governments. From a historical perspective, Central Government expenditure on court rulings amounted to EUR 19.407 billion over the period 2014-2025, equivalent to average annual expenditure of EUR 1.617 billion.
AIReF notes that the information available on these contingent liabilities remains limited, even when they have already materialised and generate a definite impact on public finances. It therefore insists on the need to strengthen the collection, updating and transparency of information on legal proceedings with a possible fiscal impact. Accordingly, it maintains its proposals to strengthen the assessment of the potential financial and legal impact before introducing regulatory changes, adopt a proactive litigation strategy and create a centralised database on the main court rulings with a possible impact on the deficit.
Public guarantees
The Opinion incorporates the analysis of public guarantees, the legally binding commitments assumed by General Government (GG) to meet debt service on behalf of the beneficiary. They do not entail an initial outlay or have an immediate budgetary impact, but may affect the deficit and debt if they are called. AIReF analyses public guarantees as contingent liabilities and stresses the need to improve their monitoring. The analysis is conditioned by the existence of different sources of information, with differences in coverage, scope and accounting criteria, which makes it difficult to obtain an integrated view of the risk.
AIReF notes that public guarantees have been used intensively during crisis episodes, such as the 2008 financial crisis and the COVID-19 pandemic. During the pandemic, guarantee schemes increased the stock of guarantees to 16% of GDP. This stock subsequently fell sharply and stood at approximately 6% of GDP at the end of 2025, below peer countries and on a downward trend. In the case of the COVID-19 guarantees arranged through the Official Credit Institute (ICO), the outstanding amount of these lines stood at around EUR 24 billion in December 2025. Exposure in non-performing transactions amounted to around EUR 7.5 billion, lower than that recorded in December 2024.
AIReF notes that guarantees continue to constitute a relevant contingent liability whose trend should be subject to continuous monitoring. It therefore proposes that Banco de España publish the most disaggregated analysis possible to improve traceability and comparability between the different sources of information and draw on, in aggregate form and while preserving confidentiality, the Central Credit Register to characterise the risk profiles of standardised guarantee lines.
Public enterprises and sector reclassification risk
For the first time, the Opinion also incorporates an analysis of public enterprises from the perspective of sector reclassification risk. AIReF analyses more than 1,600 entities-public enterprises, public business entities and commercial companies-with combined liabilities equivalent to 9% of GDP in 2024. The purpose of the analysis is to assess, preventively, the potential impact on the deficit and debt of entities whose accounts do not currently consolidate within General Government, but which could do so if their classification conditions in National Accounts change.
AIReF analyses the entities according to their subsector, volume of assets and liabilities, branch of activity, National Accounts classification and type of entity. In terms of the number of entities, Local Governments account for more than 72% of the total, although they represent only 7% of liabilities. By contrast, the central sector accounts for 8% of public entities, but concentrates 85% of liabilities.
The Opinion also reviews the phenomenon of sector reclassification over the last 15 years. During this period, more than 60% of the entities analysed (579 entities) have gone from not consolidating within GG to doing so. Reclassifications have generated a limited average impact on public debt, of EUR 500 million per year, excluding the exceptional impact of SAREB.
AIReF proposes that the IGAE or the National Accounts Technical Committee make public the reasons for reclassifications when they occur and that GG authorities proactively identify the entities with the highest reclassification risk.
Contingency Fund
AIReF updates the analysis of the Contingency Fund as the main instrument for mitigating unforeseen expenditure. Since 2024, this instrument has coexisted with the specific Contingency Fund for the DANA, created to finance the measures aimed at repairing the damage caused by the DANA of 28 October 2024.
AIReF notes that the ordinary Contingency Fund continues to allocate a significant part of its resources to financing expenditure that is not unforeseen. On average, these categories commit close to half of the amount allocated in the General State Budget, which limits the Fund’s capacity to cover expenditure that is non-discretionary and unforeseen in nature. In 2025, expenditure that was not unforeseeable accounted for slightly more than 71% of the Fund’s total.
For its part, the DANA Contingency Fund has improved budgetary flexibility and control, although limitations remain in measuring its impact in deficit terms. For 2024 and 2025, aid for those affected and repair and assistance measures in the affected areas amount to EUR 5.516 billion approved through various Council of Ministers Agreements.
AIReF insists on restricting the use of the Contingency Fund for recurrent expenditure and preserving its main function: to cover unforeseen and non-discretionary expenditure.
