The President of the Independent Authority for Fiscal Responsibility, Cristina Herrero, closed off the conference entitled ‘The Economist of the Future’, organised by the Association of Economists of Cantabria, in which she reviewed the origin of fiscal rules with the creation of the Stability and Growth Pact (SGP) in 1997 and the reforms that have been implemented since then. The conference was also attended by the Regional Councillor for Economy, Finance, Regional Funding and European Funds of the Regional Government of Cantabria, Luis Ángel Agüeros Sánchez, among other personalities.
She recalled that the rules were based on a simple fiscal coordination system that limited the deficit and public debt to 3% and 60% of GDP, respectively. If these limits were breached, a corrective procedure with sanctions was triggered. The first reform was carried out in 2005, making these rules more flexible to consider the evolution of the cycle in public finances with the introduction of the concept of structural deficit. The second reform was carried out after the financial and debt crisis and, in contrast, reinforced the rules by tightening the structural spending limit, introducing a new expenditure rule and making the debt rule operational. This second reform also represented a turning point, promoting the national appropriation of budgetary stability. This led to the European drive to create Independent Fiscal Institutions (IFIs) with the dual mission of ensuring compliance with fiscal rules and endorsing or producing macroeconomic forecasts.
AIReF was created in 2013 with these functions. However, it has gradually incorporated other functions carried out by the more traditional IFIs, which go beyond the vision of IFIs as mere guarantors of fiscal rules. In particular, during the Presidency of Cristino Herrero, fiscal supervision has impacted three aspects: supervision with a more medium-term focus, the reinforcement of early warning mechanisms, and a more structural vision, enhancing sustainability with a longer-term horizon. In parallel, a commitment has been made to integrate the evaluation of public policies as another core and stable function of AIReF insofar as it contributes to budgetary stability and sustainability.
Regarding the latest reform of the fiscal rules, which came into force in April 2024, Cristina Herrero stated that, in a way, this has meant a return to the origins of the SGP by simplifying supervision into a single variable: expenditure net of revenue measures. It also reinforces the preventive function by allowing Member States to formulate their own targets. At the same time, the reform considers important new developments, since the aim is for the targets to be stable over time, albeit with a focus on sustainability, seeking to make sustainability and growth compatible.
From a design point of view, Cristina Herrero recalled that AIReF has positively assessed the reform on numerous occasions, but doubts its implementation following the presentation of the first Medium-Term Structural-Fiscal Plans (MTP). In the case of Spain, she regretted that there had been no dialogue with General Government or debate in Parliament, nor was AIReF involved in the drafting process. In terms of content, she pointed out that the information provided by the MTP has been very limited, complying with the minimums established by the European Commission; for example, the budgetary information only refers to 2024. In this regard, she pointed out that the MTP does not constitute a genuine medium-term tax planning document and stressed that there are still tasks to be carried out to ensure its consistency with European requirements, among which she highlighted the need to specify the strategy and adapt the fiscal framework to the national strategy.
