2023-10-16 06:30:16
The International Monetary Fund (IMF) has indicated that The budget situation in Spain “is very similar” to that of other European countries, with the need for fiscal consolidation to be “a priority”, although he has warned that The situation regarding the formation of the Government “adds uncertainty.”
“We will need fiscal consolidation, so it must be a priority for the Government,” said the head of the Fund for Europe, Alfred Kammer, in a press conference within the framework of the Annual Assembly of the IMF and the World Bank in Marrakech, where he reiterated the recommendation of implement reforms that improve growth, as well as structural reforms that help improve productivity in the medium term.
In any case, the official has warned, in reference to the current Government formation process in Spain, that “of course that adds uncertainty about what the policy will be like” and said uncertainty will persist until there is a new Executive who will subsequently have to explain their policies in more detail.
In any case, in view of the adjustment that Spain must face by 2024the IMF considers that “an important part” of this may come from the planned completion of the measures deployed to address the energy crisis and other more general measures to alleviate the rising cost of living.
“That is our recommendation. They should let them expire because energy prices have normalized,” said Laura Papi, assistant to the European Department of the IMF.
In the medium term, the official of the international institution has added that other possible consolidation measures recommended would be a expansion of the tax base, reducing VAT-related deductions, in addition to appreciating “some other need for reform on the tax side.” pensions”.
In its latest macroeconomic projections for Spain, the IMF is confident that the country will manage to reduce the imbalance in its public accounts below the 3% threshold next year, when the deficitIt will stand at 2.957% of GDP, compared to the 3.921% estimated by the International Monetary Fund (IMF) for 2023.
However, in the medium term, the IMF’s projections contemplate that Spain’s deficit will remain around 3.4% of GDP during the rest of the years in the time horizon of its macroeconomic projections, which extends until 2028.
Refering to public debtthe organization led by Kristalina Georgieva expects it to close this year at 107.3% of GDP, compared to 111.6% in 2022, to continue reducing in the following years, to 104.7% in 2024 and to 103 .9% a year later, remaining around 103.8% until 2028.
“We are encouraged by the safeguards put in place in the system; however, there has been more reliance on income than on spending measures and we believe that spending measures should be included in the picture because that would favor young groups more and that This is what is needed for the future,” Papi warned.
In its ‘World Economic Outlook’ report, presented this week, The IMF maintains Spain as the large developed economy that will grow the most this year and the nextwith an expansion of 2.5% and 1.7%, respectively.
In the longer term, the entity’s forecasts contemplate an expansion of the Spanish economy of 2.1% in 2025 and 1.8% in 2026, while a year later GDP growth will be 1.7% and 1.6% in the last year of the projection.
In this way, the Spanish economy will continue to grow over the next few years above the euro zone average, for which the IMF contemplates an expansion of 0.7% this year and 1.2% the next, with a growth of 1.8% in 2025 and 1.7% in 2026, while for 2027 and 2028 it anticipates an expansion of 1.5% and 1.3%, respectively.
The growth of the Spanish economy will allow the unemployment rate to continue to be reducedthe highest among the euro countries, which will stand at 11.8% in 2023, compared to 12.9% last year, rising to 11.3% in 2024 and standing around 11.1% in the following exercise.
In this sense, IMF projections contemplate that the number of employed people in Spain will continue to increase this year and next, the only ones for which there is data, when the metric will reach 20.73 million in 2023 and up to a record of 20.93 million in 2024, thus exceeding the maximum of 20.58 million employed people reached in 2007.
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