The president of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, took part today in the ‘Wake up Spain’ conference organised by the newspaper El Español, where she stressed the importance of carrying out planning exercises like the one done with the Recovery, Transformation and Resilience Plan (RTRP) at a time of uncertainty such as the present.
This planning exercise has been driven by extraordinary circumstances and by the EU through the channelling of a large volume of European resources. The RTRP plans investments and reforms for at least a four-year horizon. According to the president of AIReF, the European funds and the RTRP have meant a major change by including incentives that appear to be more effective than penalties.
Given the importance of the instrument, which aims to recover and transform the economy, Cristina Herrero stressed the importance of having adequate information and monitoring of the instrument. In her opinion, it is essential to try to incorporate as rigorously as possible the effects of the RTRP on the economic and fiscal scenario. There is currently a great deal of budgetary and implementation information, but there is room for improvement, particularly in terms of national accounts, in order to assess the macroeconomic impact of the RTRP. In fact, AIReF has made its own approximation using all the available sources, but it would be important to make an effort to complete the information and to do so earlier.
The reforms
The President also highlighted the importance of the structural reforms committed to in the RTRP. She focused on two particularly relevant ones in the area of public finances, those that improve their quality, as well as those aimed at guaranteeing sustainability. Improving the quality of public finances is an important qualitative leap, especially in a country like Spain with a vulnerable public finance situation, with the challenge of an ageing population ever closer and bearing in mind that the new European fiscal framework will require greater attention to be paid to sustainability. In this respect, she considered the commitment to consolidate spending reviews as a regular exercise and the approval of the Evaluation Law, among other measures, to be very positive. However, she pointed out that there are still pending issues that need to be clarified and deepened in order to define a truly comprehensive evaluation system.
On the other hand, the President highlighted the reforms that seek to strengthen the sustainability of public finances, such as the pension reform. In her opinion, despite the high level of uncertainty, public administrations should take a long-term view to ensure sustainability. In this respect, the President recalled the long-term sustainability opinion published by the institution in March.
The fiscal dimension
Finally, Cristina Herrero stressed the importance of focusing on the fiscal dimension in view of the imminent return to fiscal rules after the reform. This spring, countries should begin to make their medium-term fiscal and structural strategies explicit. Although the new fiscal governance framework has not yet been approved, it seems that these strategies will have to adapt to the main principles of the Commission’s proposal, the main elements of which have been endorsed by the Council.
In this new framework proposed by the Commission, institutions such as AIReF, the IFIs, will be an integrating link between the European fiscal framework and national singularities. These institutions can provide independent analytical capacity and knowledge of the characteristics and singularities of each country, which is especially important in a decentralised country like Spain.
In conclusion, Cristina Herrero pointed out that changes, transformations and challenges are approaching, but uncertainty cannot be an excuse for not providing objective, rigorous and transparent data and analyses in their methodology, even though they may not be confirmed by a changing reality in which many national and international factors intervening are difficult to anticipate.