The Council of Ministers plans to approve the spending ceiling for 2022, the maximum disbursement figure allowed for next year and which functions as the foundation on which the General State Budgets for next year are built. With this procedure, the liturgy is launched to prepare the public accounts for 2022. The new non-financial spending limit or spending ceiling will include European aid amounting to 75,000 million for these three years.
In October last year, the Council of Ministers approved the spending ceiling for 2021, which increased by 53.7%, to 196,097 million euros, including extraordinary transfers to the autonomous communities and Social Security to face the pandemic and some 26,000 million from European funds.
For next year, the Government has not revealed the funds it will receive from the EU, but if this year they approach 20,000 million and the estimate is to receive 75,000 million between 2021 and 2023, the total amount will not be less than 20,000 million . These disbursements will be conditional on Spain meeting the milestones agreed with Brussels.
Suspension of the deficit and debt fiscal rules
As in 2020 and 2021, the European Commission has proposed that the rules limiting the public deficit and debt of the Member States remain suspended in 2022 and reactivate in 2023, once the European economies have recovered their level of GDP prior to the crisis caused by the coronavirus pandemic. Despite the suspension of fiscal rules, the Government assures that, as conditions permit, budgetary policy, which will continue to be expansionary next year, will be reoriented towards “more prudent” fiscal positions that reaffirm the sustainability of the medium-term public finances.
Therefore, for 2022 it contemplates one of “the largest declines in the public deficit”, from 8.4% in 2021 to 5% in 2022. In reality, the budget correction is not due to structural adjustments such as tax increases or spending cuts , if not rather to the growth of the economy. This reduces the public deficit as a percentage of GDP by increasing the denominator of this quotient.
Díaz: “the most expansive in history”
The Second Vice President of the Government and Minister of Labor, Yolanda Díaz, affirmed that the spending ceiling that the Government intends to approve today in the Council of Ministers will allow Spain to have the “most expansive” Budgets in the country’s history.
According to the second vice president, this issue is of “utmost importance”, because these new Budgets “have to solve the problems that the social majority of the country has.”
“It has to solve the problems of the social majority who have difficulties to pay the electricity bill, the rent of a house or of those who are going to have difficulties to start the social course,” he said, after noting that these new accounts public should be “of the people and of the social majority.”
Budget negotiation starts
The Budgets for 2022 will be in line with the budgetary policy guidelines presented by the European Commission, in terms of support for the recovery, avoiding “a premature withdrawal” of the stimuli and making full use of European funding. The coalition government partners PSOE and United We Can have already begun negotiations for the preparation of public accounts.
The Second Vice President and Minister of Labor and Social Economy, Yolanda Díaz, confirmed that the Secretary of State for Social Rights, Nacho Álvarez, would be in charge of negotiating with the Minister of Finance and Public Function, María Jesús Montero, as happened last year.
The Labor Minister advanced as priority axes the negotiation on tax reform, guaranteeing access to housing with measures that allow affordable rent, the deployment of policies that end the care crisis, that guarantee minimum benefits to the population and that they combat job insecurity.
Regarding tax reform, one of the priority axes for United We Can, the Minister of Finance and Public Function, María Jesús Montero, as well as the First Vice President and Minister of Economic Affairs and Digital Transformation, Nadia Calviño, have insisted on several occasions that It intends to address once the economy has recovered, recalling that a committee of experts has been set up that should have their conclusions on the reform of the Spanish tax system in February 2022, so that the bulk of the reform would not come into force until 2023, as reflected in the recovery plan.
Some accounts marked by European funds
The Budgets of 2022 will be marked by the application of the funds contemplated in the Recovery, Transformation and Resilience Plan, the instrument to channel the European funds approved in July 2020, within the set of community instruments included in the so-called ‘Next Generation’ , endowed with 750,000 million euros, of which Spain will receive 140,000 million.
The Spanish Executive is finishing the process together with the European Commission so that the first disbursement of pre-financing of 9,000 million occurs, which is expected in the course of the summer. In the second part of the year, the semi-annual payment of 10,000 million euros will arrive, corresponding to the fulfillment of certain milestones and objectives, so the amount of resources for this year will amount to a total of 19,000 million.
By 2022, the PGE will incorporate, not only the transfers corresponding to the funds, but will also begin to request the necessary credits to carry out the set of actions that are part of this Recovery and Transformation Plan, which has already received the approval of the Commission. European, and that are included in said exercise.
According to the Government, the 2022 accounts will support the Executive’s strategy, marked, in the short term, by continuing to support the recovery to get out of the crisis caused by Covid-19, and in the medium and long term, by promoting the process of transformation and modernization of the Spanish economy leading to a more sustainable and resilient development from an economic, social, territorial and environmental point of view.