Catalonia has once again put on the table this week the debate on fiscal consolidation and the resources available to the autonomies following the letter sent on Friday by the Minister of Economy of the Generalitat, Natàlia Mas, to the minister in functions María Jesús Montero. In his letter, the head of the Catalan Treasury described as “unfair and disproportionate” the intention of the acting Executive to force the autonomous communities to achieve budget balance next year, as detailed in the update of the Stability Program. sent in June to Brussels.
Mas demanded, in fact, a margin of at least 1% of GDP for territorial executives, arguing that they assume a good part of the spending and that Spain has committed to placing the hole for all Public Administrations at 3% when Brussels will recover fiscal rules. He also asked the minister to also have the estimate of the income that his community will receive next year from the financing model, since these represent “more than 80% of the general resources available to the Generalitat.”
The political paralysis that has derived from the results of the elections of July 23 and the fact that the Government remains in office leads the country, almost in all probability, to the fifth extension of the General State Budgets in ten years . And this implies, among many other things, that the common regime autonomies (all, except the Basque Country and Navarra, which have their own financing system) will see their resources frozen until a new text exists.
Neither the income from the payments on account that the State must pay them for the shared taxes (IRPF, VAT and special taxes) nor for the funds (Guarantee, Sufficiency, Convergence and Cooperation) that compensate the most disadvantaged by the current system will be updated. of financing. Thus, a budget extension could strain the liquidity of the autonomies at the beginning of 2024, although in the first months of the year the territories could have advances due to the record liquidation of 2022 that could tempt regional governments to increase spending. . public.
At the moment, Catalonia would have registered an imbalance of 1% of its GDP between last January and June, according to data recently published by the Ministry of Finance and Public Function. These confirm how the regions are far exceeding the 0.3% limit to which they had committed to sticking throughout this exercise. The Central Government has called on them to continue with the path of consolidation, despite the fact that the European Commission keeps the escape clause activated until January 1, which allowed member states to increase public spending and debt to be able to face the crisis. the consequences of the Covid pandemic, first, and the energy crisis, the inflationary crisis and the war in Ukraine, later.
Spending rises more than income coinciding with elections
In the first semester, Murcia (1.59%), the Balearic Islands (1.55%), the Valencian Community (1.42%) and Navarra (1.34%) are the four autonomies that incur the greatest deficit this year, well above 0.86%. which the group registers on average and which is equivalent to about 12,110 million euros, that is, 4,000 million above what they reached in the same period of the previous year. In that period, spending has increased far above income, coinciding with the holding of the regional and municipal elections on May 28. Only Asturias (-0.28%) and the Basque Country (-0.08%) adjust to the expected limit.
Regarding the State, its deficit increased to 2.68% of GDP from January to July due, precisely, to the 11,798 million that it has had to pay to communities and local entities on account of the 2021 settlement. The current The financing system (which none of the successive governments has been able to reform despite the fact that it expired in 2014) provides for the State to deliver on account to the regional governments the amounts that they estimate they will collect.
After two years, when there is already a real collection figure, the Central Administration settles with the autonomous communities based on the advance they received at the time. In 2021, these revenues far exceeded what was expected (Spain collected a total of 223,382 million euros via taxes that year, the highest collection in history up to that point) and the State has now had to disburse the difference, which has had a significant impact. negative in their accounts.
