The President of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, took part today in the Cajamar-Ivie conference cycle and stated that the reform of the national fiscal governance framework cannot be put off any longer. During her speech, she stated that AIReF will publish an Opinion later this year on the elements that, according to AIReF, should be addressed to adapt the national framework to the new European framework and to overcome the limitations that have built up over the years.
Cristina Herrero began by reviewing the reform of the European fiscal framework, approved in 2024, which introduces a profound change of approach by placing sustainability and growth at the heart of the framework. In addition, it is committed to greater national ownership by countries and the establishment of stable medium-term commitments. The main changes also include the establishment of a new control variable – primary expenditure net of discretionary revenue measures – and the introduction of Medium-Term Structural-Fiscal Plans (MTPs) as a central planning instrument.
Cristina Herrero recalled that Spain presented its first MTP in October 2024, which AIReF evaluated in November, concluding that it is a political commitment to aggregate fiscal targets rather than a true medium-term fiscal strategy. This minimal approach, according to the President, is repeated in the first Annual Progress Report published by the Government on April 30th, which still lacks sufficient ambition to be considered a genuine medium-term planning instrument, as AIReF observed in the report published on May 14th.
In that report, AIReF estimated that no additional measures would be necessary in 2025 and 2026 to comply with the new European fiscal rules, but that they would be necessary in subsequent years. It also assessed the implications of complying with the national expenditure rule and concluded that it would lead to compliance with the European rule in 2025 and 2026, but not in 2027. It also proposed a scenario based on compliance with the expenditure commitments assumed by the Government that would allow the deficit and public debt to be reduced, but only provided that adjustment measures are adopted as from 2027. Under this scenario, the deficit would stand at 1.7% of GDP in 2028 and debt would fall to 75.6% of GDP in 2041.
In the report, AIReF also updated its macroeconomic and fiscal forecasts for the period 2025-2029 in a no-policy change scenario. It estimated GDP growth of 2.3% for 2025, which will gradually moderate to 1.5% by 2029. In this context, the public deficit would remain below the 3% of GDP threshold throughout the period, and the debt ratio would follow a slight downward path.
National reform
Based on these analyses, AIReF concludes that it is necessary to define a genuine medium-term strategy and start work on reforming the national framework. Furthermore, the President recalled that the new fiscal framework strengthens the role of Independent Fiscal Institutions such as AIReF with a new function of analysing the soundness, coherence and effectiveness of the national framework, which is why the institution will publish an Opinion on the elements to be reformed.
According to Cristina Herrero, the national reform, which is necessary to adapt the regulations to European changes and revise the shortcomings that have built up over the years, should not be postponed. Moreover, it requires a comprehensive vision and the participation of all the agents involved (Autonomous Regions and Local Governments, Parliament, AIReF and the Fiscal and Financial Policy Council). In fact, Cristina Herrero considered that the reform should go beyond the mere transposition of the European Directive and address all the elements of the national governance framework. She also recalled that AIReF has made several recommendations in recent reports to make progress on these pending tasks.
