2023-09-21 18:11:04
The president of the Independent Fiscal Responsibility Authority (AIReF), Cristina Herrerourged the Ministry of Finance this Thursday to call the regional governments to a meeting of the Fiscal and Financial Policy Council (CPFF), or to, failing that, communicate to each of the communities the income that the State will send them in 2024 so that they can prepare their own budgets for next year.
The interim situation that affects the current Government in office prevents you from passing the usual deficit targets that serve as a guide for the preparation of the Budget projects of the regional governments. However, as Herrero explained at an informative breakfast organized by ‘Nueva Economía Fórum’, nothing prevents the Treasury from communicating to each community the income it will have in 2024.
Deliveries on account and expense rule
In fact, the ‘Minister’ of Economy of Catalonia, Natàlia Mas, has complained in a letter to the acting Minister of Finance, Maria Jesus Montero, an income forecast of the financing model to prepare the company’s budgets Generalitat by 2024. “For this, it is essential to have the income from the financing model, which represents more than 80% of the general resources available to the Generalitat. Unfortunately, the ministry has not given us this information,” Mas highlighted in the letter. sent to Montero.
For its part, the ministry has ruled out a CPFF meeting at this time, while the Government is in office. Furthermore, it is considered that it will be up to the next constituted Government – and not one in office – to communicate to each community the amount of deliveries on account which will be sent to them in 2024.
Preliminary estimates point to a strong increase in regional income in 2024 since in that year the final settlement of 2022 will take place, a year in which tax collection surprised upwards and exceeded all expectations.
AIReF fears that this increase in income – which could be around 9% – will lead to a similar increase in structural expenses of the communities (in whose competences weighs health and education). That is why Herrero also claims that the Treasury, making use of the spending rule of the Stability Law, set the maximum percentage by which expenses can grow in 2024. According to AIReF estimates, as the spending rule is defined, the growth limit of items for 2024 would be 2.6% .
Deficit forecasts
The AIReF comes possible that the deficit of all public administrations go from the 4% of GDP that he estimates for 2023 to 3% in 2024. Herrero pointed out that, in any case, this reduction in the deficit will occur only if all the measures adopted by the Government to alleviate the effects of the energy crisis (such as tax reductions on electricity, gas and food and aid for public transport) end on December 31, as currently provided by the Executive. Furthermore, to go down to 3%, Herrero considers it essential that all the autonomous communities close their balanced accountssomething that may be unlikely if a cap on spending growth is not applied.
Cristina Herrero explained that the AIReF has organized a round of meetings with the financial managers of each autonomous community to address the budget scenario for 2024.
More intense deceleration
During his speech at the New Economy forum, Herrero pointed out that AIReF now foresees a slowdown in economic growth “with greater intensity and anticipation” than expected before the summer. “The available indicators and data point to a slowdown in economic growth for the second half of the year, in addition to a certain loss of dynamism in regards to the labor market,” Herrero stated.
In its latest forecasts, AIReF anticipated economic growth in 2023 of 2.3% in real terms and estimated an increase of 2.3% in 2024. Gross Domestic Product (GDP) of 1.9%. Among the factors that affect the economy in this second part of the year, Herrero has pointed out the persistence of underlying inflation, the rebound in gas and oil pricesthe deterioration of international trade and the transfer of the tightening of monetary conditions to the real economy.
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