this The International Monetary Fund is concerned about the high level of public debt that the Spanish economy has reached (116% of GDP according to September data), and after facing the onslaught of covid and the first energy crisis, it’s time to move on with the Budget adjustments.
In its annual report on the Spanish economy, released this Wednesday, the IMF recommends: setting way It should lead to a “nearly balanced structural fiscal year position” in the coming years, with the goal of “putting debt on a path of steady decline” at “at least 0.6 percentage point of annual GDP” starting from 2024. at the end of this decade”, at the gates of 2030. This reference is equivalent to implementation every year. structural arrangement approximately 8,000 million euros in successive ways spending cuts or tax hikes chained up
Before that, it is “recommended” to start with a moderate reduction until 2023. primary structural fiscal deficit(excluding interest payments), “as much as 15 percent of GDP.” If converted to euros, the IMF would demand structural adjustment from the Spanish government between 3,200 and 6,500 million euros for next year.
In reality, the working body Kristalina Georgieva He comments that the government’s budget plan for 2023 already includes a reduction in the structural deficit by 0.3 percentage points (about 3,900 million euros). “This consolidation rate is usually appropriateAlthough implementation is subject to risks in 2023, as it depends in part on continued strength of revenues and lower spending on energy measures,” says the IMF report. The structural adjustment planned by the government for 2023 is above all permanent increases taxes. Provisional tax increases are not considered for these purposes as they are not structural; Nor is the withdrawal of spending associated with the support measures against covid.
Provisional taxes and energy measures
The IMF report “welcomes” the implementation of the new “provisional” taxes. the banking, Energy and properties financing support measures for the most vulnerable groups in the context of the current energy crisis. However, he warns that it would be more convenient to rotate. about the benefitsIt abolishes taxes on banks and energy companies instead of income, and warns that the new tax on financial institutions should not hurt the supply of credit.
The fund leverages its report to call for a “higher degree of targeting” in favor of the most vulnerable families and companies in response to the energy crisis. In that sense, he believes there are such measures. electrical and thermal social ties, an increase in minimum living income and direct industry assistance to companies are moving in the right direction; not so others like discounts tax electricity and fuel discount. “For example, the use of direct transfers in the form of fixed-amount coupons (ideally linked to income or household size) is preferable to applying price reduction measures.”
growth and inflation
The IMF confirms the slowing path of the Spanish economy – in line with the world trend – and forecasts a growth of only 1.2% in 2023, despite increasing 3 tenths of what is expected by 2022, as predicted in its autumn forecasts. 4.6% In any case, the body currently denies that it will fall into the Spanish economy. technical recession (negative GDP growth rates for two consecutive quarters), as clarified by Dora, head of the IMF Mission to Spain Gjakovaat a press conference. While explaining that the growth will be very close to zero in the coming quarters due to weak foreign demand and deterioration in consumer confidence, Iakova stated that it will be possible to avoid two chains of change with negative rates. It is estimated that Spain will not be able to recover to its former levels. GDP to the beginning of 2024 before the pandemic.
Regarding inflation, it is expected to gradually soften in 2023. Gjakova is “reasonably confident” that inflation will not be in double digits. “Even so, headline and core inflation are likely to remain above the 2% target through 2024,” the report said.
despite calling Core inflation (not taking into account the more volatile energy and unprocessed food prices) remains high above 6%, the IMF “so far a wage-price spiral However, it is noted that “the proportion of workers affected by wage contracts with inflation indexing provisions has increased slightly” and “Rental contractIt was agreed that the costs of the increase in energy prices would be distributed through “a temporary decrease in the real income of households and companies”.