Back to square one, although with some more uncertainties than on other occasions (the immediately previous one took place in 2020 with the longest-running State accounts of Democracy as protagonists). The complicated parliamentary arithmetic that arose from the elections of July 23 and the delay of the investiture debate of the candidate Alberto Núñez Feijóo at the end of next month, the next September 26 and 27, point to a more than foreseeable extension of the budgets . General of the State in force in 2024.
The Minister of Finance and Public Function, María Jesús Montero, defended that the “will” of the acting Government is to approve the new text in “time and form” just a few hours ago in statements to TVE. Their clashes squarely with a devilish calendar that leaves little room for maneuver not only for the Central, but also for the other Public Administrations, which do not have sufficient information to design their economic policy. At the same time, regional governments, in particular, may already find themselves with liquidity contentions as soon as the new year begins.
The budget extension implies that the common system autonomies (all except the Basque Country and Navarra, which have their own financing systems) see their resources frozen until the existence of a new text. That is, they are not going to see updated the income from deliveries on account that the State must pay them for shared taxes (IRPF, VAT and special) or for the funds (Guarantee, Sufficiency, Convergence and Cooperation) that serve to compensate the most disadvantaged territories by the current system. This expired in 2014 and has been generating notable disagreements between the territories since its approval.
The lack of this liquidity, which in fact accounts for eight out of every ten euros of the total income received by communities each year, can be a problem for those that are in a worse financial situation, as is the case in Catalonia or the Valencian Community. The first presents the largest volume of debt with the data available to date. Its liabilities exceeded 85,400 million euros until March, according to figures published by the Bank of Spain (BdE). This amount is equivalent to 33% of its GDP.
In the case of the Valencian Community, its indebtedness is much higher in relative terms, since it is practically equivalent to half of its wealth. It amounts to 55,439 million, about 44% of the size of its economy. Both regions owe a large part of this amount to the State, given that they are financed through the Autonomous Liquidity Fund (FLA), which began to be mandatory for those that did not comply with the fiscal objectives committed to the Central Government and that, once it is resolved liquidity tensions in the debt markets after the last financial crisis, became voluntary.
The steps prior to the elaboration of the accounts have not been taken
It should be remembered that the Budget bill would have to be submitted to Congress on September 30 at the latest, so that it can enter into force on January 1. In its article 134, the Constitution establishes that the State Accounts must reach the Lower House at least three months before the expiration of the previous year. However, the incoming government can present and carry out the bill throughout 2024, even retroactively in the case of some specific items. Before, the date of the investiture debate of the leader of the PP would complicate times if it were not successful, since he would force a new debate to be held with another candidate – the acting president, Pedro Sánchez – weeks later.
The Executive did not convene the Fiscal and Financial Policy Council (CPFF) or the National Local Administration Commission (CNAL) last month, two appointments that actually serve as the starting signal for the preparation of the budgetary framework, given that in them The head of the Treasury communicates to the territorial governments the deficit and debt ceilings to which they must adhere next year. Given that in January Brussels will recover fiscal discipline -after having suspended fiscal rules due to the pandemic, first, and due to the war in Ukraine and the inflationary and energy crises, later- this call was of vital importance this year.
The logic of the budget extension
The setting of a spending ceiling or limit for 2024 is just as important and for the same reasons, which the acting government has not yet made public. The positive part is that, by not having this reference, the administrations could tend to raise public spending less, since they cannot incorporate new spending commitments. This would make it possible to maintain the necessary path of fiscal consolidation, given that the deficit for the country as a whole closed last year at 4.8% and the debt to GDP ratio did so at 113.2%. Next year Spain will have to undertake a fiscal adjustment of around 10,000 million euros, as José Manuel Corrales, economist and professor at the European University of Madrid, reminds ‘La Información’.
In his opinion, the budgetary extension seems the “logical” procedure when the Government is in office. “It does not seem admissible that he could start the processing of budgets when the investiture has not yet taken place,” he points out. And even if this were to occur, from his point of view it is clear that the focus is not so much on budgetary dynamics as on other clearly political issues, such as the Catalan conflict or the very beginnings of the legislature, in case this comes to pass. good port and there is no electoral repetition next January 14.
