The Independent Authority for Fiscal Responsibility (AIReF) published on Thursday 7th April the Report on the Initial Budgets of the General Government (GG) for 2022 and the individual reports of each Autonomous Region (AR), in which it estimates that nine ARs will close 2022 with a deficit below the reference rate of -0.6%. For the sub-sector as a whole, AIReF estimates a deficit of 0.7% of GDP in 2022, 0.1 points higher than its estimate in the October report.
In the reports, AIReF improves the 2022 deficit forecasts of seven ARs and worsens those of seven others. A major part of the individual variations stem, in the negative direction, from the recording of the REACT-EU funds and the transferred expenditure of support for companies and, to a lesser extent, the deferral of the State tax on waste to the following year. In the positive direction, the forecasts have been affected by the year-end 2021 figures and, with a limited effect, the estimated impact of current inflation, which is expected to be more pronounced this year on revenue than on expenditure.
Specifically, forecasts for Aragon, Asturias, the Balearic Islands, Cantabria, Navarre, the Basque Country and Rioja improve. On the contrary, the outlook worsens in the Canary Islands, Castile and Leon, Galicia, Andalusia, Catalonia, Murcia and Valencia, with the last four regions forecast to record higher deficits than the reference rate. Finally, the forecasts for Castilla-La Mancha, Extremadura and Madrid are maintained.
AIReF also published on April 7th the Supplementary Report on the Individual Evaluation of the 2022 Budgets of the Local Governments, in which it performs the individual analysis of the 24 large local governments which, due to the size of their budgets, powers, organisational structures and affected population, have a decisive impact on the performance of the sub-sector.
For the sub-sector as a whole, AIReF estimates that in 2022 the LGs will maintain the surplus of 0.3% of GDP achieved in 2021. The data reported show significant changes compared with those included in the previous report, especially in the city councils of Barcelona, Las Palmas de Gran Canaria and Alicante, whose forecasts change from surplus to deficit.
With these new data, the city councils of Barcelona, Palma, Las Palmas de Gran Canaria, Bilbao, Alicante, Valladolid and the three Provincial Councils of the Basque Country expect a deficit in 2022.
AIReF forecasts that only the city councils of Barcelona, Bilbao and Valladolid will incur a deficit as it estimates a lower degree of expenditure execution, consistent with what has been recorded in recent years.
