Spanish government commits to bringing the deficit down to 3% by 2024

The Spanish government is committed to reducing the country’s deficit to 3% of its GDP by 2024, one year earlier than foreseen by the progressive government, Finance Minister María Jesús Montero confirmed on Thursday.

Madrid sent Brussels an updated version of its stability programme on Thursday, with a corrected deficit forecast to comply with the EU fiscal rules that will be in force –again- in 2024.

“The beauty and the good thing about this fiscal consolidation (is that it is being done) without cutting policies, trying to help all those sectors that have been in the worst situation and therefore protecting the social majority of the country”, Montero (PSOE/S&D) told the press in parliament.

For 2023, the Spanish government, a progressive coalition forged by the PSOE and left-wing Unidas Podemos (EU Left), maintains a reduction of the public deficit to 3.9 % of the GDP, while for 2025, it could stand at 2.7%, and in 2026, at 2.5%, sources at the Finance Ministry said.

The revised and improved fiscal scenario results from “the good progress” of the Spanish economy, with an expected growth rate above the EU average, and the dynamism in job creation, with record figures for Social Security enrolment, Montero added.

This situation makes it possible to take advantage of “part of the revenue to accelerate the fiscal consolidation process” and also to do so “just before the fiscal rules are activated”, the minister explained.

Sources at the finance ministry have stressed that economic and employment growth has allowed for a structural increase in revenue, which in 2022 was 14.4%.

As is the case in Spain, EU countries whose public deficit exceeds 3% of the GDP will have to undertake greater budgetary adjustments compared with the “good pupils” of the group.

In the event of reiterated non-compliance, they will face fines every six months, which will be cumulative until they adopt “effective measures” to correct imbalances, according to a legislative proposal to reform the Stability and Growth Pact presented on Wednesday by the European Commission.

The European Executive agreed with EU member states on how to reactivate the path of fiscal consolidation in Europe after months of tough negotiations at the political level and four years of “impasse” due to the COVID-19 pandemic and the Russian invasion of Ukraine.

The main aim of the reform is to adapt the European budgetary framework to the “heterogeneous” fiscal situation of EU countries whose public debts have soared in recent years and also leave room for them to accelerate the green and digital transition.

Spain will hold regional and municipal elections on 28 May, with a general election expected to take place in December, during the country’s final month of presidency of the EU Council.

(Fernando Heller | EuroEFE.EURACTIV.es)