The Independent Authority for Fiscal Responsibility (AIReF) published the Main Lines of the Budgets of the General Government Sector 2024 on its website today, along with the individual reports of the Autonomous Regions (ARs) and the individual evaluation report of the Local Governments (LGs). For the AR sub-sector as a whole, AIReF estimates a surplus of 0.2% of GDP in 2024.
AIReF has worsened its forecast for year-end 2023 contained in its report of July 6th by 0.2 points to 0.6% of GDP, based on the execution data observed to date, the update of year-end 2022 and the information provided by the Regions. The new estimate coincides with the Budgetary Plan. The perspectives for year-end 2023 are worse for most ARs. Under the new forecasts, 11 ARs will exceed the reference rate of -0.3% of GDP set for the sub-sector, while five ARs will close with a surplus.
For 2024, AIReF estimates that the AR sub-sector will achieve a surplus of 0.2% of GDP, compared with a deficit of 0.1% forecast in the Budgetary Plan and the balance estimated for the ARs as a whole in their budgetary lines. AIReF thus calculates that the sub-sector balance will improve by 0.8 points compared with the forecast for 2023, primarily as a result of the exceptional increase in revenue under the Regional Financing System stemming from the settlement in 2022. In 2024, only Murcia and Valencia would close the year with a deficit, albeit with a substantial improvement compared with the balance estimated for these Regions in 2023.
Achieving the balance forecast for the ARs under AIReF’s revenue forecast would imply growth in expenditure of 6% and an increase in eligible expenditure of 8%. This could compromise compliance with the Country Specific Recommendation (CSR) for the General Government Sector in 2024 and worsen the expected medium-term balance.
AIReF has presented medium-term budgetary scenarios for each AR for the first time. As a whole, it forecasts that the sub-sector will maintain a deficit of 0.1% as from 2026 in a scenario of constant policies, following the normalisation of the flows deriving from the Regional Financing System. In the medium term, under a scenario of constant policies, most ARs would be able to maintain a positive balance or one close to zero.
