The president of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, today took part in a webinar on the challenges facing the public sector organised by the Foundation for Stock Market and Financial Studies (FEBF). During her speech, she highlighted the commitment to the quality of public finances through assessment as a key lever for tackling the major challenges facing the public sector: the vulnerability of public finances and the implementation of the new European fiscal framework.
Cristina Herrero pointed out that, in the medium term, public finances will perform in a context of moderate economic growth. In the absence of shocks, AIReF forecasts real growth of around 2% for 2023 and 2024. In the long term, AIReF estimates average growth of 1.3% over the period 2022-2070, as stated in its Opinion on the long-term sustainability of the Public Administrations. In this context, the deficit would stagnate at levels of 3% of GDP in the medium term and debt would stabilise at over 100% of GDP. In the long run, under a no-policy change scenario, both the deficit and debt would return to an upward trend.
According to the president of AIReF, this situation reduces the room for manoeuvre in the face of the future challenges facing the Spanish economy: ageing and the increase in the financial burden, such that inaction or late action could generate unfavourable debt dynamics that put sustainability at risk.
The President recalled that the return to fiscal rules is imminent and that the new fiscal governance will place sustainability, but also growth, at the centre. This new framework will involve the implementation of reforms and investments by the States that must promote growth and contribute to sustainability, for which the evaluation of public policies will be fundamental.
According to the President, improving the quality of public finances is a key way to generate fiscal space in a context of high spending pressure and limited resources. This requires a true culture of evaluation of the efficiency and effectiveness of public policies. Although much progress has been made in recent years, further progress is needed to consolidate evaluation in Spain.
Cristina Herrero recalled that the European impetus was decisive in promoting a new form of evaluation in Public Administrations, given that, until then, analyses of effectiveness and efficiency were very ad hoc. Today evaluation is one of AIReF’s main functions, following the boost given by component 29 of the Recovery, Transformation and Resilience Plan, which resulted in the creation of a new Division in AIReF, gave permanence to the assignments known as Spending Review and boosted the incorporation of AIReF’s proposals into the decision-making process.
Challenges to strengthening evaluation
Despite this progress, the president pointed out that there are still challenges to be met in order to consolidate evaluation in AIReF and that regulatory changes would be advisable in order to maintain the quantitative and qualitative relevance of the assignments and ensure their continuity regardless of political cycles, strengthen the monitoring of evaluation results, improve access to information and guarantee an adequate level of financial and human resources in AIReF.
She also stressed the need to continue making progress in parallel in the consolidation of evaluation in Spain, as AIReF cannot be the only evaluator. AIReF, in fact, is committed to a three-tier model made up of independent and external evaluation agents such as AIReF, an internal government institution in charge of coordination and a management centre in charge of continuous monitoring.