Airef criticizes the Government for the lack of information on the execution of European funds | Economy
The European funds of the Recovery, Transformation and Resilience Plan are key for the Spanish economy. This is confirmed in the Budgets and in the Government’s estimates of its impact as a catalyst for the economy. For this reason, the Independent Authority for Fiscal Responsibility (Airef) criticized the Executive on Tuesday for the lack of data. “The Government considers that there is sufficient information. It is true that there is a lot, but in our opinion it is very disaggregated and dispersed. To know the real impact on the economy, another type of information is required. Until it is provided, it is difficult to follow up ”, Cristina Herrero, president of Airef, reproached this Tuesday.
With the information that exists, according to Herrero, the task of monitoring and forecasting the effect that the arrival of European manna will have is complicated. “It is very difficult to make an estimate of the economic impact, although we have already revised downwards our forecasts of the multiplier of these investments due to the current most adverse context”, added the president of the body that oversees public accounts in Santander, during her participation in the seminar organized by the Association of Economic Information Journalists (APIE) at the Menéndez Pelayo International University (UIMP). In addition to this reduction in the multiplier effect, Airef also delays the impact of the funds to the last years of the plan, an oxygen cylinder that will not be felt strongly until at least 2023.
The Government, meanwhile, maintains its position: there is enough information. Something that is true, in part, since data on amounts authorized, committed or transferred to the autonomous communities is periodically sent. However, the gap comes when it comes to supplementing this with actual spending figures. That is to say, that execution that has already reached street level and that has a multiplier effect on the local economy. It is there where the Airef puts duties both to the Executive and to the autonomies.
“It is true that in budgetary terms the level of information is very detailed and the degree of execution is high. What happens is that an important part are transfers, so that the communities are the ones that have to manage those resources and make the expense. That is why we ask for execution information from the central Administration and the autonomous communities, which are encountering various management problems”, explained Herrero. In addition, he has clarified that the Public Administration needs resources to deal with this tsunami: “They have scarce resources in many cases to attend to the traditional structural funds and also those of the Next Generation”.
raise the debt bill
The president of the Airef has taken advantage of her participation in the summer courses of the UIMP to explain the work of the organization. To repeat the need for Spain to set a fiscal strategy and set a credible and gradual debt reduction path. And to point out that the new economic environment will be expensive for the State: with the rise in rates, “the cost of public debt will rise by another 12,000 or 14,000 million” by 2025, Herrero encrypted. A few months ago, the agency already calculated that this expense for liabilities rose to 20,000 million for the 2022-2025 period, an amount that continues to grow.
These calculations are full of nuances, as Herrero insisted in his speech: “Everything will depend on how firm the ECB’s actions are with the anti-fragmentation instrument [de la deuda de los países de la zona euro] and of the revision of the rates”. On this point, the ups and downs of the markets in recent weeks after the Eurobank announcements and nuances of the measures to be carried out serve as an example.
In addition, he has explained the positive and adverse effects of inflation for the correction of the deficit. In the short term, the collection increases, which is favorable. However, in the medium term it will end up causing an extra cost by raising the payment in pensions and by a higher cost of interest on the debt. Thus, he has broken down that if the payment in pensions is updated with the CPI, each point of inflation costs 1,500 million euros. And there is 65,000 million of debt linked to the rise in prices, in which each point has a bill of an additional 700 million in interest payments. This, together with the current uncertainty and the foreseeable return of the community fiscal rules, leaves Spain in a fragile position with a deficit and a higher than healthy level of debt. “The structural deficit has increased by half a point compared to before the crisis”, the president of Airef has detailed.
