The Valencian Community will close 2023 with a deficit of 1.5% of its GDP. These are estimates made by the Independent Accountability Authority (Airef), which worsens the previous report’s estimates by half a percentage point, because, according to the organization, “the level of expense has increased and the level of expected income has decreased in relation to those assessed online”.
According to the Valencia Community’s Initial Budgets 2023 Report, autonomy is projected to reach a deficit of 0.3% of GDP, something Airef has changed. In this sense, Generalitat does not record the transfer from the State amounting to EUR 1,336 million, known as the “complaint item” of the regional financing and which Airef describes as “usual” in its closing estimate. However, the 1.5% figure is significantly lower than the 2022 Valencia accounts deficit, which rose to 3.1%, according to data from the Ministry of Finance, a record figure among autonomies.
Airef, on the other hand, raises its estimates of tax revenue from investments and disposals of European funds, while reducing the budget and the level of work envisaged in the budget by the same amount. Community income will increase by 14% compared to the previous year and reach 15.8% of GDP, excluding funds from the Recovery, Transformation and Resilience Plan (PRTR).
As for expenses, excluding those financed by the Recovery Plan, they will increase by 3% compared to the previous year to 17.3% of GDP. Regarding the Valencian Community debt, Airef expects this to be around 44.5% of GDP in 2023, a higher level than anticipated in the previous report. Airef, on the other hand, thinks that for the purposes of the spending rule, calculable spending will rise to over 3% in 2023 for the Valencian Community.
A deficit of 1.5% for 2023 represents an improvement in this negative balance compared to the end of last year. Thus, in 2022, Generalitat closed the fiscal year with an imbalance of 3,847 million euros, or 3.11% of GDP, more than double what is currently expected, according to official data from the Ministry of Finance.
Wake-up call to Alicante City Council for increase in spending
Of the 26 local companies Airef examined, two from the Valencian Community are receiving a wake-up call: Alicante City Council and Valencia City Council. The Financial Authority report asks these companies to avoid new increases in expenses or reductions in revenues of a structural nature for which permanent financing is not guaranteed. In this context, the economic authority points out that the average growth in calculable spending in 2022 is more than 9%, this figure was unprecedented in previous years and came after an increase of more than seven percent in 2021. he also addressed the city councils of Barcelona, Madrid, Córdoba, Palma and Valladolid, and the Provincial Council of Valencia, the Provincial Council of Cabildo de Tenerife, Consell de Mallorca and Guipúzcoa.