2023-12-12 19:59:00
The next preparation of the public accounts or the State Budgets requires readers to understand concepts such as deficit o public debtclearly differentiating them from what those terms mean for the individual and business accounts.
He public deficit It is the difference between income and expenses for a given year.
By public debt or sovereign debt It is understood as the set of debts that a State maintains against individuals or other countries. It requires ways to obtain financial resources from the State or any public power, normally materialized through issues of securities or bonds. Includes external debt and internal debt.
Public debt is not like the debt of individuals
He debt concept It is different for public accounts than for a company or for individuals. If for a company a high level of debt can pose a serious threat to its survival (in the event that the imbalance between income and expenses is chronic or structural), in the case of states this element is an instrument of redistribution for companies. Economic politics. Debt can be offset through instruments such as debt securities (bonds, debentures, etc.) and is essential to undertake recovery strategies. economic policy.
Debt and trust in institutions
La tmodern monetary theory establishes that public debt does not imply the repayment of the debt in its entirety at any time. If a country has a central bank, that central bank can face the debt due to the confidence of the markets. This theory is discussed by orthodox economists, although the latest economic crisis unleashed by the pandemic has shown that the support of the central bank and the redistribution of resources has been adequate compared to that followed in 2008. At that time, the limits of Debt and deficit only served to aggravate the situation of the population at a time of inflation and with no prospect of these prices going down.
Fiscal and Financial Policy Council
The Government has convened the Fiscal and Financial Policy Council (CPFF) this Monday with the aim of informing the autonomous communities of the stability objectives that will serve as a reference to prepare the General State Budgets (PGE) for 2024. For the next financial year, the Government – at that time in office – sent the 2024 budget plan to Brussels in October, which included a deficit forecast of around 3% for next year and a public debt ratio below of 110% of GDP already by 2023.
European Commission evaluation
The European Commission has already given its approval to Spain’s budget project, but has urged the new Government to present an updated plan “as soon as possible”, since the current one was submitted in October by the acting Executive – as in the case of Slovakia, Luxembourg and the Netherlands–, while warning that the country will face a “very difficult” fiscal situation in 2024 with a deficit above the 3% limit and a “quite high” debt.
Regional and state deficit
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The plan contemplates a more flexible deficit for the autonomous communities in 2024, with a rate of 0.1%, compared to the budget balance included in the Stability Program last April. That tenth of more margin for the autonomous communities will be assumed by the Central Administration, whose deficit in 2024 will be 2.9%, compared to 3% in the previous forecast.
Social Security Deficit
For its part, Social Security maintains the planned deficit at 0.2% for 2024, as it appeared in the Stability Program. For local entities, the projection of a surplus of 0.2% for next year is also maintained.
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