The next discussion around public accounts or national Budgets requires readers to grasp key concepts such as open or public debt, clearly distinguishing them from the meanings of these terms when applied to individual or business accounts.
The public deficit is the gap between income and expenses within a given year.
Public debt, or government debt, refers to a series of obligations held by a state toward individuals, institutions, or other countries. It is financed through means that generate resources for the state or public authorities, typically via the issuance of securities or bonds. This debt includes both external and domestic components.
Public debt is not the same as private debt
The concept of debt for public accounts differs from that for companies or individuals. A high level of debt for a company may threaten its survival if the imbalance between revenue and costs is chronic or structural. For governments, however, debt serves as a tool for redistribution and policy implementation. Debt can be offset by instruments such as bills and bonds and is often necessary to support recovery strategies through economic policy.
Debt and trust in institutions
Modern monetary theory suggests that public debt does not require repayment of the entire amount in a short period. If a country has a central bank, that bank can manage debt with market confidence. While the pandemic crisis underscored the stabilizing role of central bank support and resource redistribution, some orthodox economists challenge this view. The deficit played a role in worsening conditions for the population when inflation rose and prices did not yet fall.
Fiscal and Fiscal Policy Council
The government convened the Fiscal and Fiscal Policy Council to inform autonomous communities about stability targets that will guide the preparation of the 2024 General State Budgets. The administering government had submitted its 2024 budget plan to Brussels in October, which projected a deficit of around 3 percent for the coming year and a public debt ratio below 110 percent of GDP by 2023.
European Commission assessment
The European Commission has approved Spain’s budget project but, as with Slovakia, has urged the new government to present an updated plan as soon as possible since the current plan was laid out by the acting administration in October. Luxembourg and the Netherlands warned that the country could face a very difficult fiscal situation in 2024 with a deficit above 3 percent and a relatively high debt level.
Regional and state deficit
The plan allows for a slightly more flexible deficit for autonomous communities in 2024, by 0.1 percentage points relative to the balance in the Stabilization Program from April. This additional margin will be absorbed by the central government, which expects a 2024 deficit of 2.9 percent compared to a prior estimate of 3 percent.
Social vulnerability
As shown in the Stability Program, Social Security maintains the 2024 deficit projection at 0.2 percent. The local entities are also anticipated to carry a 0.2 percent surplus for next year.