Brussels warns Spain of default in deficit and debt reduction for 2020
The headquarters of the European Union asks the future Government for an "updated" budget with adjustments worth 9.6 billion
The budget draft sent by the Spanish Government to the European Commission in mid-October “runs the risk of breaching” the deficit and public debt reduction commitments, as stated in the report issued this Wednesday by the community institution.
Brussels has published its opinion on the budget plan sent by the Government of Pedro Sánchez, which extends the accounts for this year to 2020. The Community Executive thinks that this draft “can result in a significant deviation” with respect to the path of fiscal consolidation agreed with the EU.
It also rebukes Spain for the “insufficient” rate of reduction of public debt. In particular, it accuses the country of not taking into account “enough” the “high historical level” of this indicator and of not “taking advantage” of the lower interest costs of the debt to reduce it. Thus, the European document calculates that the Spanish public debt will be at 96.6% at the end of 2020, a percentage higher than the 94.6% estimated by the Government in its extended budget plan.
9.6 billion adjustment
Brussels estimates that the gap between revenues and public expenditures will close this year at 2.3% of GDP and 2.2% in 2020, compared to government estimates that forecast a deviation of 2% and 1.7% respectively. But, once the corrective arm has been abandoned, the community authorities focus on the structural balance, which does not take into account the economic cycle. In this case, the Commission does not believe the improvement of 0.1% of the structural deficit calculated by the Government and in fact the economic services of the Community Executive point out that it will deteriorate a little more than a tenth.
The path agreed with the EU requires Spain a structural effort equivalent to 0.65% of GDP in 2020, so the current gap, with the budget extended, amounts to 0.8%. This means that the future Government will have to adopt adjustments for 9.6 billion euros, either raising revenues or cutting expenses, to comply with fiscal regulations.
Source: dpa
