The CPFF approves the deficit target of the Autonomous Communities for 2020 and path 2021-2

The holder of the Treasury has presented in the CPFF the deficit and debt objective of the Autonomous Communities of 2020 as well as the objectives of budgetary stability for these regions in the period 2021-2023.

In both cases the margins contemplated in the previous path have been expanded to make it more passable and adapt it to the current economic situation of EsTreasurypaña, while ensuring that the Autonomous Communities can provide quality public services. These objectives are also compatible with Spain's commitment to the EU to reduce the public deficit and advance budgetary stability.

In this way, the 2020 deficit target for the Autonomous Communities stands at 0.2%, which is two tenths more than the previous path approved in 2017 and which set budget balance.

Likewise, the Fiscal and Financial Policy Council has approved the deficit and debt path of the Autonomous Communities for the period 2021-2023. Specifically, by 2021 the deficit target will be 0.1% and by 2022 and 2023 they will reach the budget balance.

This new path aims to give more space to the Autonomous Communities so that they can correct the imbalances without jeopardizing economic growth or job creation. This is another element of the social orientation that the Government wants to promote.

For its part, the debt objective of the Autonomous Communities is set at 23.4% in 2020; in 2021 in 22.8%; in 2022 in 22.1%; and in 2023 in 21.4%.

Measures against VAT settlement

The Minister of Finance has influenced the Executive's commitment to improve the financing of the different territories. In this sense, Montero has recalled the latest measures approved by the Government for the benefit of the Autonomous Communities, such as the update of deliveries on account of 2019 being the Executive in functions and in a situation of budgetary extension, something that had never happened beforeTreasury.

In this regard, the Ministry of Finance is aware of the claims of the Autonomous Communities regarding the problem generated by a previous government with the 2017 VAT settlement. Montero recalled that the current Executive has already proposed a solution in the 2019 General Budgets To correct that problem. However, the rejection of public accounts prevented these resources from reaching the Autonomous Communities in the exercise that legally corresponded to them.

The minister stressed that this circumstance has not caused the Autonomous Communities to cut spending, but it has resulted in an increase in the deficit and a possible increase in average payment periods. Therefore, to correct this situation, the minister has transferred a series of palliative measures to the regional authorities:

  • In order to determine the fulfillment of the 2019 stability objective, the part of the deficit attributable to VAT will no longer be taken into account or computed due to the 2017 regulatory change. Thus, if an autonomous community, when discounting the effects VAT, meets the 2019 deficit target, will not have to prepare the Financial Economic Plans (PEF), as long as they comply with the rest of the tax rules. And if you take advantage of extraordinary liquidity mechanisms, you will be assigned to the Financial Facility compartment instead of FLA, If you meet the other requirements. This is relevant in order to combine the exit to the markets with the resources of the extraordinary liquidity mechanisms.
  • To finance this greater deficit and prevent suppliers from being harmed, the Government will make available to the autonomous communities an extra FLA / Financial Facility, with an interest rate of 0%.
  • In addition, the 2020 deficit target is relaxed to 0.2%, with which the autonomous communities earn two tenths compared to the budget balance required by the current path. Discounting the effect of VAT -which implies a one-off that will not be repeated in this or subsequent years-, the fiscal effort of the CCAA this year will be more moderate.

The meeting of the Fiscal and Financial Policy Council has also served to reaffirm the commitment of the Government of Pedro Sánchez with the reform of the autonomous financing system. María Jesús Montero has been confident that the autonomous communities will go to that negotiation with the best of attitudes to achieve closing a new model that is fair, lasting, supportive and that guarantees equality in access to public services.

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