Airef (Independent Fiscal Responsibility Authority) has given its approval to the proposal of the Ministry of Finance of a debt ratio to the communities of the general regime of about 83,000 million in total, but considers that the measure “must carry conditionality”.
Specifically, the Fiscal Authority believes that the condonation must ensure that communities do not accumulate more debt. “A debt condonation operation must be carried out by tax conditionality for a double reason,” he says In a statement Published this Thursday, after Wednesday the communities of the PP left the Fiscal Policy Council in which the Treasury took the first step to carry out its proposal.
The first reason referred to by Airef to justify conditionality is “the problems of moral chance that surround this type of operations.” That is, to the incentive that this precedent can assume for the communities of borrowing more with the State will make other removes.
The second reason is “for the need to strengthen the guarantees of compliance with fiscal rules.” In other words, the fiscal authority sees an opportunity in the sentence to demand that the communities accept it (and if approved in Congress) that limit the growth of public spending, according to the new fiscal corset of the European Union (EU), which entered into force in 2024.
“It makes no sense to make a debt forgiveness if it is not guaranteed that future debt will not accumulate over what allows fiscal rules,” the airf affects.
This independent institution does approve the spirit of the proposal of the Treasury, which is born from the pact between the PSOE and ERC to invest the president of the Government, Pedro Sánchez, in 2023, and which has the objectives of “sanitizing regional public accounts to reinforce the welfare state [de sus presupuestos depende la sanidad o la educación]”; and to “improve its financial sustainability” to “facilitate its access to markets,” according to Vice President María Jesús Montero.
“If the law ends approved in the terms we have raised, because it requires a law, there is no conditionality,” said the Minister of Finance on Monday. “This condonation is assumed by the State and there is no consideration that the autonomous communities have to do. I have said it from the first moment: we are generous because we believe in the state of autonomies and we also believe that there was a damage to the autonomous communities in the previous financial crisis that caused an over -indebtedness, ”he reiterated.
Repair of the austerity of the financial crisis
“The financial and sovereign crisis of 2008 placed Spanish public finances in a difficult position. In just one year, the collection fell more than four points of GDP and that forced increasing indebtedness, which affected both the State and the Autonomous Communities, in a context in which the cost of financing was very high, which made it difficult or prevented some communities from being financed in financial markets, ”explains Airef.
“This situation resulted in the creation of the extraordinary financing mechanisms, while having to adopt fiscal consolidation measures to send to the markets an unequivocal signal of the commitment to stability and because it was forced by the application of European and national fiscal frameworks that, unlike what happened in the recent crisis, were not suspended,” he continues.
“The adjustment measures in some cases materialized through a reduction in spending and on other occasions through a tax rise or a combination of both options [la austeridad]in a context in which the European response was also different, ”he recalls.
“Extraordinary financing mechanisms [en el caso de España el FLA (fondo de liquidez autómica), a través del que el Estado prestó dinero a las comunidades]as the name implies, they had a vocation of temporality, which is also applicable to the suspension of the rule of no ‘Bail out’ [rescate con dinero público] necessary for its creation. However, almost 20 years later these mechanisms are still underway, which are now called additional financing mechanisms. In this sense, it may be convenient to face the return of the autonomous communities to the markets, to the discipline they impose, and recover the clause of no ‘Bail Out’ [rescate]”, Concludes, in line with the argument of the Ministry of Finance.
The distribution of the forgation or removes of the debt raised by the Treasury follows “technical and transparent” criteria according to “the adjusted population of each territory, the over -indebtedness in the previous financial crisis and the fiscal effort [fases 1, 2 y 3, en el primer gráfico de esta información]”In recent years, explained the minister on Monday.
In the third fit phase, there is an important key to the Treasury proposal. In their calculations they reward the regions that their regulatory powers in IRPF have worked up. That is, they have demanded a greater fiscal effort to their taxpayers, who have not dropped taxes.
This last adjustment has been adhered to the IRPF part that depends on the autonomous communities, but avoids entering other taxes assigned to the communities, such as heritage or successions, that the governments of the PP of the Community of Madrid or Andalusia have used to make fiscal competence in recent years.
Airef warns that it is “a very partial approach consider only the rising exercise of the regulatory competences in IRPF as approximation of the effort made by the communities. Therefore, with all the limitations it may present, the variable that best reflects this effort would be precisely the computable expense since the effort can come both on the side of the expense and on the side of the income ”.
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