• Review The IMF raises the growth forecast for the world economy but lowers that of Spain

The International Monetary Fund (IMF)

does not believe the deficit targets of the Government of Spain neither 2020 nor 2021

.

This is clear in its review of the fiscal prospects of its member countries, published today.

For the year that has just ended, the Fund foresees an imbalance of

11.7%

of GDP, thus contradicting the Government spokesperson and Minister of Finance, María Jesús Montero, who on the 3rd of July insisted that the target set by the Executive at 11.3%.

For 2021, the Fund estimates a deficit of

8.2%

of GDP, five tenths higher than that forecast in the General State Budgets and seven more than the IMF forecast just three months ago.

The 11.7% deficit figure is significant, because it exceeds by four tenths that reached in 2009, the worst year for the slopes of the State of the explosion of the 'brick bubble'.

To find a worse year, one had to go back, possibly, to the times of the civil war or, for an example in peacetime, to the Great Depression of the 1930s.

In fact, the Fund's database, which ends in 1980, does not record any year with a larger deficit.

That is the big difference between Spain and most of the industrialized economies

.

All are going through, due to Covid-19, a period of deficit and collapse of growth such as has not been seen since the Great Depression.

The problem with Spain - and some other European countries - is that it is the second fiscal catastrophe in little more than a decade.

First, the euro crisis.

Now, that of Covid-19.

Although the impact has been slightly less than what the IMF expected three months ago - the deficit will be 2.4 points of GDP lower than the last forecast, in October - it continues to be historic.

And, in the current context, the Fund is very clear: we

must continue to spend so that the economies do not collapse

.

The director of the Fund's Financial Affairs Office, the Portuguese Vitor Gaspar, said it unequivocally at a press conference on Wednesday: "Fiscal policy has literally saved lives and livelihoods."

In the case of industrialized economies, Gaspar - who, precisely, was Portugal's finance minister during the first years of the euro crisis - did not leave a single doubt about it.

"China and the United States are two of the economies in which the drop in production has been less, thanks to their fiscal stimuli."

And, most especially, he defended the new mega-stimulus of 1.9 trillion dollars (15.7 trillion euros) presented by Joe Biden to Congress, despite the fact that Congress, if approved, will pass it with a considerable reduction.

"We think it is appropriate," he said of the project.

Developed economies, Gaspar recalled, "

have a wide

fiscal

room for maneuver

, and they should take advantage of it.

The question is: where does the EU fit in that context?

Gaspar gave his press conference on the same day that French Finance Minister Bruno Le Maire told the

Financial Times

that the European rescue fund "is too slow and complicated" for the needs of the EU countries. .

And when this newspaper asked him about it, he directly supported the position of Paris.

"I fully sympathize with the concept of speed" in the aids, he replied.

Gaspar insisted that "

the aid be timely and fast is extremely important

."

But, immediately after, the sales came.

"When we look at the [EU] stimulus package, we see that it prioritizes competitiveness in the long term," which means favoring sectors such as digital technologies and

green

energy

.

"So the importance of being accountable and offering the proper documentation is crucial," he said.

The head of the IMF's fiscal area concluded by repeating a phrase that he had already pronounced a few months ago: "

Do what you have to do, but keep the receipts

."

More support but also control

Thus, the IMF believes that the European Union can and should be more supportive of the economies of its member countries.

But, also, that the aid must be controlled in the most rigorous way.

"It is important to have a fiscal framework for the medium term so that the debt returns to the path of sustainability," he explained.

Not that there are problems on that front for now.

In fact, despite Spain's huge deficits and the collapse of its GDP,

public debt is barely going to grow this year

, due to the interventions of central banks, which keep interest rates at zero, if not negative.

The Spanish government does not seem to be in a hurry about that either.

In fact, in relation to October, the IMF worsens the imbalance by seven tenths for 2021. It is a measure that seems in line with the cut, announced on Monday, of the economic growth prospects for next year.

The point is that once the economies begin to reopen,

activity will rebound strongly and with it, prices will rise

.

In fact, the prices of some raw materials are already rising, partly due to China's recovery and partly due to the existence of 'bottlenecks' in the market, as the IMF's chief economist explained on Monday;

Gita Gopinath.

But that, for the Fund, is a concern for later.

For now, the priority is more public spending to avoid a major collapse of the economies.

A public expenditure, yes, transparent and well distributed.

According to the criteria of The Trust Project

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