The President of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, took part in the OEA-CESUR Forum, where she gave a talk on the challenges that the reform of the European fiscal framework poses for all General Government (GG), including the Autonomous Regions and Local Governments. In her remarks, she stressed the need to align the national fiscal framework with the European reform by promoting its three underlying pillars: a medium-term perspective, national ownership and differentiation.
Cristina Herrero noted that the European reform, in force since 2024, represents a major shift in how fiscal rules operate, as it promotes the medium-term sustainability of public finances while remaining compatible with economic growth. She explained that the reform strengthens national ownership and, with it, country-specific approaches, by requiring each Member State to design its own fiscal strategy with stable commitments for a four-year period. The reform also introduces a single control variable for defining and monitoring those commitments: primary expenditure net of revenue measures. It also creates a new planning document – the Medium-Term Fiscal-Structural Plan – as the tool in which these commitments are set out, together with the associated reforms and investment plans.
According to the President, the national fiscal framework needs to be reformed to meet the requirements of the new European framework and to address the design and implementation shortcomings it has shown since it was introduced. This reform must incorporate the Medium-Term Fiscal-Structural Plan (MTP) into the national framework, set up a system for defining national targets that is consistent with the European variables, and create a mechanism for allocating those targets across the GG that takes account of feasibility and of their differing circumstances. It must also remove the discrepancies between the national and European expenditure rules.
National ownership, differentiation and a medium-term perspective across administrations
Cristina Herrero argued for a differentiated multi-year system of commitments for both the Autonomous Regions (ARs) and Local Governments (LGs), tailored to their structural position and to the feasibility of meeting the targets. She noted that, in the case of the ARs, the medium-term outlook points to the fiscal balance stabilising close to equilibrium for the subsector as a whole, alongside non-compliance with the national expenditure rule. A similar picture emerges for LGs: AIReF expects them to post a surplus over the medium term, but to breach the expenditure rule in 2025 and 2026, with substantial differences between individual LGs. However, there is a high degree of heterogeneity in terms of budgetary stability and sustainability both among the ARs and the LGs.
The President argued that applying the European principles should mean differentiating the contribution of the ARs and LGs to the national commitments, strengthening ownership across all administrations, and giving a fresh impetus to coordinated medium-term planning. She added that it will be essential to take an integrated view that reflects the interconnection between subsectors and ensures consistency at all levels.
Finally, the President underlined that evaluating public policies will be a central component of the new European fiscal framework, as it promotes more efficient and higher-quality public spending at a time when expenditure is under growing upward pressure. She noted the evaluation studies already carried out for several regional governments, as well as the recent analysis of municipal waste management – a local-level study commissioned by the central government as part of the Spending Review. She also observed that Local Governments have not yet made individual requests to AIReF, and emphasised the important role of the National Commission of the Local Administrations (CNAL) as a body that can commission assessments on cross-cutting issues affecting all LGs.
