Cristina Herrero, new president of the Independent Fiscal Authority is against making the rule more flexible, as Minister Mara Jess Montero defends

The president of the AIReF, Cristina Herrero (i), and the Minister of Finance, Mara Jess Montero.

The new president of the Independent Authority for Fiscal Responsibility (AIReF),Cristina Herrero, refuses to soften the spending rule in what constitutes its first clash with the Minister of Finance,Mara Jess Montero. This is a rule that prevents public spending from overflowing a reasonable percentage based on economic growth and experts believe that it will have avoided subsequent cuts in the crisis. This year should not exceed 2.9%.

The appearances of Montero and Herrero in Parliament in recent days show strong differences in the spending rule. AIReF sources confirm to this newspaper that Herrero is against accepting a relaxation of this measure from the outset and they refer to his words before the Finance Commission of the Congress of Deputies. The successor of Jos Luis Escriv at the head of the Independent Fiscal Authority considers the spending rule a key weapon to provide Spain with budgetary margin in the event of a possible crisis and will defend it, according to the sources consulted.

In huge contrast, Montero said last Thursday in Congress that he accepts the request of several government allies to take the smoothing step for both the autonomous communities and the municipalities. “I am aware that some of the political groups of this Chamber – specifically, Bildu, Esquerra Republicana de Catalunya, Comproms and Ms Pas – and, for example, the Spanish Federation of Municipalities and Provinces, have asked the Government for the flexibility of the spending rule and I want to tell you that we are going to pick up this request, “said the minister in applause.

So far not onlyCristbal Montoro, but she herself has given long to relax the norm, because it especially constricts the municipalities that are key so that the State as a whole does not present an uncontrolled deficit. The surplus that forces the spending rule on municipal corporations helps to ensure that the final picture of the deficit sent to Brussels is not more serious, but the political weakness of the current Government leads to the step. According to a statement from EH Bildu, its training on Thursday supported the state deficit path, “after the ratification of the agreement reached between the PSOE and EH Bildu to make the spending rule more flexible and allow social investments to the municipalities.”

Montero did not mention the PNV in the rostrum, but he is the most demanding in flexibilization. “Many administrations of Autonomous Communities and Local Entities ask to reform the interpretation of the spending rule that prevents them from using their available surplus. We believe that once the deficit and debt objectives have been met by the public administrations, all the surplus generated should be dedicated to to meet the needs of the citizen, to improve public services to actions that generate quality and wealth employment, “said PNV Senator Mara Dolores Etxano to Montero herself.

Multiannual Rule

On the other side is Blacksmith. Last Tuesday, in the appearance in which the Finance Commission approved his appointment at the head of the AIReF for unusualunanimity, this is expressed about this measure designed to contain public spending. “Regarding the flexibility of the spending rule, we participate in a work group, which is supposed to make the spending rule more flexible in the local area, and I suppose that at some point in the autonomous field. I don’t like that name, because it contains a priori and that the result of the group is going to be the flexibility of the spending rule. I prefer to think that AIReF participates in a group in which the definition of the spending rule is improving, which can lead to a flexibilization in some points and perhaps to a greater rigor in others “.

And he made it clear that “flexibility, not how the expense rule is being measured in which the consolidations of excess expenditures of the previous year are allowed.” I called it “traps” to make this cors more bearable. “If the spending rule allows you to spend up to five and you spend seven, the starting point for spending the following year is seven, not the five that you had to comply with. That leads to a perverse application of the rule in the sense that the best thing you can do is break the one-year spending rule and consolidate future growth. “

What Herrero agrees to accept in a new spending rule that is not annual, but multi-annual, to ensure that a more serious goal in the medium term is more important, than the ups and downs of spending with which it is reached. But that, he explained, does not necessarily imply flexibility, but another methodology.

AIReF, Banco de Espaa and international organizations agree that Spain’s high indebtedness and structural deficit is a great vulnerability in case of crisis. For example, the spread of the coronavirus is forcing Italy to take tax relief measures and that penalizes it in the markets. Spain is without budgetary margin after the time lost in the years of growth. A relaxation of the spending rule will further delay the cleanup of public accounts, according to AIReF.

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