The President of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, took part today in the dialogue at the Spanish Association of Executives (AED), together with the Chief Editor of Economic Affairs and Business at El País, Jesús Sérvulo, where she reviewed the economic and fiscal situation Spain finds itself in.
The President began by explaining the work performed by AIReF and the contributions it can make to the business world. She stated that AIReF is, first and foremost, a fiscal supervisor, which has expanded its functions and become a benchmark in economic, budgetary and evaluation analysis, capable of furnishing objective data at a macroeconomic level and more granularity in the fiscal debate.
Cristina Herrero referred to the economic situation, marked by the slowdown and uncertainty, although she highlighted that Spain is resisting better than other EU countries thanks to its productive structure, more tied in to the services sector, among other factors. In her opinion, the foreign trade sector and the resistance of the labour market are proving to be key for the evolution of the Spanish economy, although there are signs that both areas are becoming less dynamic.
At a fiscal level, she highlighted the situation of vulnerability of the public accounts, with both the public debt and deficit at high levels. She recalled that, in the medium term, AIReF projects that the public deficit will stagnate at around 3% of GDP and debt at around 100% of GDP and that, in the longer term and only taking into account the effect of demographics, AIReF expects that both parameters will rise again. In this regard, she underlined the need to boost economic growth and act as soon as possible to avoid having to make major adjustments.
Cristina Herrero also referred to the new framework of fiscal rules being negotiated in the European Union which, in her opinion, will be demanding in setting objectives and, above all, in demanding compliance therewith. In her words, the framework proposed has more chance of being applied, even as regards sanctions, given that they are less far-reaching, which shows a greater intention of carrying them out as and when appropriate. In this regard, she once again stressed the importance of Spain reaching a “country agreement” to comply with the new demands of the framework, which implies the development of a medium-term plan to reduce debt in a sustained and plausible fashion.
Lastly, she referred to the evaluation function performed by AIReF and indicated the need for it to push through changes to help consolidate and regulate this activity well now that the cycle of the 2018-2021 Spending Review has ended and the 2022-2026 Spending Review begins. In this regard, she recalled that AIReF is receiving an increasing number of commissions from the Autonomous Regions compared with a reduction in the scope of the policies evaluated under the Spending Review of the Central Government, which has stopped commissioning evaluations on fundamental matters for the country like Health and Employment, and which still has the study of Education pending. She also recalled that international bodies are calling for AIReF to take a certain initiative in the choice of matters to be evaluated.