May 16, 2021

The Bank of Spain charges against the Budgets of Sánchez

The Bank of Spain charges against the Budgets of Sánchez


The governor of the Bank of Spain (BdE) has warned before the Committee on Budgets of the Congress of Deputies that the government's revenue forecast is "subject to significant downside risks."

Pablo Hernández de Cos recalled that the General Budgets of the State contemplate an estimated increase in income of 8.2%, but there are four factors that will make it impossible to meet that estimate. De Cos has had a special impact on two. First, the accounting issue. The Treasury has accounted for 13 months of income instead of 12, but the Bank of Spain believes that this month can not be incorporated, which will affect the public deficit and will, according to the BdE projection models, make this forecast of revenue from the Budgets fall from 8.2% to 6.9%.

In addition, the governor has indicated that the "elasticities" that the Government of Sanchez has incorporated in the PGE on the impact of certain tax measures or VAT on private consumption are higher than the historical average, especially with respect to social contributions, what would leave this forecast of increase in income at 5.6%. De Cos has indicated that the delay in the entry into force of these PGE "may affect the forecast of income".

With all these risks, the supervisor estimates that the deficit forecast contained in the PGE of 1.3% of the mismatch of the accounts will be breached. "Simply incorporating the new measures and not the risks would bring us 2% of public deficit. Very far from the goal of 1.3% of the budget plan of the PGE. Even the deviation could be greater, because it is done on the collection impacts of official estimates. But if those estimates are overvalued, the deficit will be even greater, "the governor remarked. An imbalance that would also increase if the entry into force of the PGE is delayed. A deviation of 1.3% deficit to 2% implies 8,500 million more deficit for the State accounts.

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