The Government admits that it will fail to meet its own softened deficit target

• Fiscal Authority: AIReF asks Andalusia, the Community of Madrid and Aragon to defer their tax breaks or seek other income

The Government admits that it will fail to meet its own softened deficit target for this year. A high government source assures EL MUNDO that it is no longer possible to reduce the public deficit to 2% of the Gross Domestic Product (GDP) as planned, but "it is going to try to get as close as possible to that 2%."

Therefore, although the president of the acting Government, Pedro Sánchez, often emphasizes his commitment to budgetary stability, the State will skip all the objectives of containing the deficit set this year. Not only the official still legally valid of 1.3% or the 1.8% negotiated by the Minister of Economy, Nadia Calviño, in Brussels; also the aforementioned 2%, which is announced by the head of the Treasury, María Jesús Montero, after the general elections of April as the new objective set by the Government for this election year since the previous ones were impossible.

This last bar was the statement to the European Commission in the stability program last October and European Commissioners Valdis Dombrovskis and Pierre Moscovici affected by letter to Calviño that implied " risk of significant deviation " of the structural adjustment expected in Brussels within the rules of the euro.

The State closed 2018 with a 2.5% deficit, so 2019 points to a serious year lost in the sanitation of public accounts, which have influenced both the so-called election Fridays of last March and the recent fall in revenues in Corporation tax. The additional problem is that the Government's own official forecast is that this year 2019 will be the last one with a remarkable economic growth of around 2% and the deceleration is expected to be more acute as of 2020 .

The challenge for the new Government will be enormous . If you want to comply with the stability program sent by Pedro Sánchez to Brussels, you must lower the deficit to 1.1% of GDP in 2020, which would imply an adjustment effort of more than 12,000 million in a year of deceleration. And that figure should include the 7,800 million structural adjustment - outside the economic cycle - that Brussels requires. The final magnitude will depend on how the deficit ends in 2019, whose final data will be known at the beginning of next year. This is how Sánchez committed himself last October with his EU partners: “The fiscal consolidation effort will continue until 2022 through a set of fiscal measures whose processing is in an advanced state, with a progressive reduction of the deficit from 2.5 % registered in 2018 to 2% in 2019, 1.1% in 2020, 0.4% in 2021 and an equilibrium situation in 2022 ».

In the Government, however, they attribute the fiasco to the autonomous communities. «The General State Administration will comply, but the autonomous communities are deviating from the objective as stated by the AIReF [Independent Authority of Fiscal Responsibility]", they assure in the Executive, which still governs with the general budgets of the State extended since 2018, prepared by the previous holder of the Treasury, Cristóbal Montoro.

The report published by the body chaired by José Luis Escrivá last Thursday corroborates that the autonomous communities not only will not meet the objective of lowering their deficit to 0.1% from 0.3% in 2018, but will increase it to 0, 5%. The communities of Valencia, Aragon, Castilla-La Mancha, Murcia and Extremadura are the most worrisome, according to this agency, but the risk of default is almost widespread.

The fiscal engineering battle of these last weeks of the year is how much the State can approach 2%. The Bank of Spain is officially maintained at 2.4%, although it will be reviewed again in the coming weeks. Its general director in the study service, Oscar Arce, is the one who has been more successful this year in alerting that the deficit was not going to reach 2%. AIReF considered it "feasible" for most of the year and only in this last quarter is it considered "unlikely" compliance.

The governor of the Bank of Spain, Pablo Hernández de Cos, placed the deficit last day 3 in a dinner organized by the Association of Communication Managers, Dircom, as the first problem that the new Government must address when being essential to an eventual crisis ,

Feijóo: "Galicia meets the deficit if the Treasury meets"

The Xunta de Galicia usually stands out every year in complying with the deficit rules, but in 2019 it joins the squad of the laggards, according to the AIReF. The president of the Xunta de Galicia, Alberto Núñez Feijóo, assured this newspaper in an informal conversation last Friday during the acts of the Constitution in the Congress of Deputies that his community would meet if the Treasury had resolved the delivery of the month of VAT due . "Galicia complies, if the Treasury complies with VAT," he says.

This is the 2,496 million that, according to the PP, the Government should pay before the end of the year to the autonomous communities for VAT not settled in 2017, when the then Minister of Finance, Cristóbal Montoro, modified the so-called Immediate Supply of Information (SII) in the collection of VAT so that it was limited that year to 11 months for accounting purposes of the State. Feijóo says that with the 200 million that the Xunta should receive this year for this concept, its compliance problems would be solved, but the acting Minister of Finance, María Jesús Montero, refuses to do so on duty due to legal problems. In his opinion, it is more complex than the calls to deliver on account that did unlock in functions.

According to AIReF, if the impact of the change in IBS were moved to 2017, the regional deficit would not grow, but would stagnate this year at 0.3%. All autonomous communities claim that debt and some, such as Madrid, have taken the Government to court, so far without result. However, AIReF maintains that the two tenths of GDP that Montero means to retain that money cannot be computed so that the Central Administration can square its objectives.

According to the criteria of The Trust Project

• Maria Jesus Montero
• Nadia Calviño
• Public deficit

The Valencian Community accumulates almost a third of the regional deficit

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