The President of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, participated today in a lunch-meeting organised by APD Zona Sur and stated that the need for a medium-term fiscal strategy also extends to the regional governments, which will have to design their own strategies to ensure the sustainability of public finances.
During her speech, entitled “Economic and fiscal outlook for the Spanish economy”, the President of AIReF highlighted the succession of shocks that have dominated the international scene since 2020, which have generated a context of maximum uncertainty. This fact, together with an evolving institutional framework, makes it essential to make use of economic and fiscal forecasts to lay the foundations of a comprehensive economic strategy, with a medium-term vision that provides certainty and predictability to public action.
In her view, AIReF’s recommendation to design a credible and realistic medium-term fiscal strategy, with involvement at all levels, is more necessary than ever. “The situation of national and regional finances requires it,” she said.
She explained that the Central Government and the Autonomous Regions are going to record a sharp increase in revenue in the coming years that is purely circumstantial. The former due to the high Revenue-GDP elasticity that usually characterises periods of recovery in the Spanish economy and due to high inflation. For the Autonomous Regions, this increase is due to the positive settlements of the regional financing system for 2021 and 2022, which will be paid in 2023 and 2024.
In a context of suspended fiscal rules, there is a risk that this temporary revenue will be allocated to finance structural increases in expenditure or structural reductions in other revenue. For this reason, and taking into account the situation of public finances, AIReF highlights the importance of its work of analysis and warning and recommends allocating this increase in revenue to reducing the structural deficit.
Andalusia
Cristina Herrero also reviewed the situation in Andalusia, a region that ended 2021 with a debt of 23.1% of GDP, slightly below the average for the sub-sector. In 2022, AIReF estimates that Andalusia will reduce its debt to 22.1% of GDP. In the long term, under certain assumptions, a reduction of 12 points in the debt ratio is projected over the next 15 years. Under this scenario, the pre-pandemic debt level would be reached in 2023. As regards the deficit, AIReF estimates a deficit of 0.8% for Andalusia in 2022, compared with the 0.7% that it estimates for the sub-sector as a whole.