The Ministry of Finance has published today on its website the consolidated deficit of the Central Administration, Autonomous Communities and Social Security for the month of March in terms of national accounting, as well as the state deficit data for April.
Statistics already reflect significant impacts caused by the health and economic crisis derived from COVID-19. A situation that will continue to sharpen in the coming months.
On the one hand, there is a reduction in income due to the drop in business activity and lower consumption, but also due to the measures
adopted by the Government to provide liquidity to companies through, for example, the exoneration of contributions in ERTEs due to force majeure, which has meant a reduction in income.
On the other hand, the measures approved to mitigate the social impact, such as the cessation of activity benefit for the self-employed, have caused an increase in expenses. Added to this is the notable increase in intermediate consumption derived from the rise in spending in the National Health System to cope with the pandemic.
State deficit (April)
In the first four months of the year, the State deficit amounted to 19,929 million. In terms of GDP, it is equivalent to 1.78%, which represents an increase of 1.16 percentage points compared to April 2019. This evolution is explained by a drop in resources of 6.7%, compared to an increase in expenses of 11.75%. The update of the installments on account and the advance of half of the 2018 settlement that has allowed to transfer important resources to the Autonomous Communities to face the health emergency also influences.
The operations of the State this month are framed in an extraordinary economic and social context, a situation that already began to have an impact in the middle of last month after the declaration of the state of alarm by RDL 463/2020, of March 14, and which they are most strongly reflected in the April data.
In the fourth month of the year alone, income fell by 29.2% and expenses increased by 48.7%, as a result of tax deferrals, moratoriums, greater aid and other measures adopted to alleviate the effects of the crisis. .
Likewise, as indicated in previous publications, since January 1, 2020, the reversal of toll motorways in 2020 (AP4 and AP7) has occurred for an amount of 1,745 million, without correspondence in 2020 that will affect to the total volume of income and expenses of the State throughout the year, but that will not have an impact on the deficit.
State non-financial resources
In the first four months of the year, non-financial resources amounted to 57,335 million, which represents a decrease of 6.7% compared to 2019.
Income for the month of April is affected, like last month, by the stoppage of almost all activity as a consequence of the health emergency caused by COVID-19
Tax resources, which represent 81.4% of the total, stood at 46,648 million, representing a decrease of 11%. Virtually all tax figures fall. On the one hand, the 6.1% decrease in taxes on production and imports stands out, among which VAT fell by 9.6%, to 23,428 million. Regarding current taxes on income and wealth, which decreased by 19.8%, Corporation Tax decreased by 9.1%. In the case of personal income tax, the drop is 26.5%, although in this case the largest payments on account to the autonomous communities have a significant impact. Capital taxes fall by 20% and social contributions fall by 1.7%, mainly due to the progressive replacement of active employees with the Passive Class System, by others with the Social Security System.
Regarding the rest of the resources, which follow the same downward trend, property income stands out, falling by 17.7%, within which interest decreased by 15.7%.
Non-financial state jobs
Until April, non-financial jobs have risen to 77,264 million, 11.8% higher than in 2019.
This evolution again derives from the extraordinary situation caused by COVID-19. Firstly, it is affected by the notable increase in intermediate consumption, as well as by the increase in current transfers to other Public Administrations, which grew by 6,126 million, mainly due to the financing system, including advances from the 2018 settlement, as well as for the transfer to the Autonomous Communities, for an amount of 303 million, of the Extraordinary Fund for basic benefits of social services to face COVID-19 and 206 million of the health benefits and pharmacy program.
Capital transfers also increase, highlighting transfers to the CCAA for 369 million subsidies to the State Housing Plan.
Intermediate consumption grew by 35.4% more, as a consequence of the 891 million in the SNS health and pharmacy benefits budget program related to the COVID-19, without correspondence in 2019. The remuneration of employees has increased by 1.3% due to to the equalization of the salary of the Police and Civil Guard with the autonomous bodies and the rise in remuneration after the II Government-Unions Agreement reached in March 2019, to improve public employment; and the remuneration increase corresponding to 2020 of 2% compared to 2.25% in 2019.
Social transfers in kind grew to 91 million, and social benefits other than social transfers in kind increased by 3.2%, a figure that reflects the update of passive class pensions of 0.9%.
Also noteworthy is the increase in investment, an increase that is mainly explained by the reversal of toll roads in 2020 (AP4 and AP7).
These increases are partially offset by a decrease of 8% in interest, 22.6% in current international cooperation and 7.4% in the EU's own resources.
Finally, investment aid and other capital transfers also decreased as a result of the return of the maternity and paternity benefit tax in 2019 for the amount of 723 million, and without correspondence in 2020.
Joint deficit of the Central Administration, Autonomous Communities and Social Security (March)
Until the end of March 2020, the need for joint financing from the Central Administration, the Social Security Funds and the Regional Administration, excluding financial aid, was 8,636 million, equivalent to 0.77% of GDP, compared to 0, 31% of GDP registered until March 2019.
If the balance of aid to financial institutions is included in both periods (172 million in 2019 and -38 million in 2020), the deficit would be 8,674 million euros, equivalent to 0.78% of GDP.
Obviously, these data also show the first impacts caused by the health emergency.
The Central Administration has registered a deficit of 0.58% of GDP excluding financial aid, estimated at 38 million in the first quarter.
- The state deficit in March is equivalent to 0.56% of GDP, standing at 6,288 million.
- The Central Administration Bodies record a deficit of 179 million, excluding financial aid, 0.02% of GDP.
The Autonomous Communities have registered a deficit of 1,703 million, 0.15% of GDP. This evolution is explained by an increase in resources of 5.1%, slightly less than the increase in jobs of 5.2%, a situation that is mainly explained by the impact caused by the health emergency caused by COVID-19 .
On the resource side, it is worth noting the 8.2% increase in tax revenues, especially income and wealth flows, which grew by 16.5%.
Taxes on production and imports fell by 11.5%, highlighting the 9.5% drop in ITP and AJD, among others. In the month of March alone, 410 million tax revenues were lost as a result of the crisis.
The increase registered in transfers received from other Public Administrations by 5.5% also stands out. In this sense, it must be taken into account that, in both 2019 and 2020, there has been an extension of the PGE, although in 2020, by virtue of Royal Decree-Law 7/2020, of March 12, which adopt urgent measures to respond to the economic impact of COVID-19, the Government updated the installments on account that would have corresponded for the entire year in March and April.
Within non-financial spending, which increased 5.2%, intermediate consumption grew 7% due to the increase in hospital pharmaceutical spending and in spending on medical devices without a prescription or dispensing order, strongly conditioned by COVID. A situation that would also specifically explain higher spending on health concerts. On the other hand, the remuneration of employees increases 4.7%, mainly due to the general increase in remuneration and the impact of COVID until March.
On the other hand, social transfers in kind grew by 7.1%, highlighting the significant increase in spending on pharmaceutical and health products for medical prescriptions or dispensing orders. Subsidies grew by 24.2% and social benefits by 13.6%. Lastly, investment grew by 1.4% and transfers between AAPP increased by 1.7%. In contrast, interest expense decreased by 9.6%.
The communities of Andalusia, Aragon, Cantabria, Castilla la Mancha, Castilla y León, Cataluña, Madrid, Navarra and Valencia registered a worse budgetary result in March than that registered in the same month of 2019. On the contrary, the rest of the CCAA have improved its budget result.
Social security funds
The Social Security Funds have obtained a deficit of 0.04% of GDP. This deterioration responds fundamentally to the impacts caused by the crisis derived from COVID-19, both on social contributions and on benefits. Resources have decreased by 4.9% compared to non-financial expenses, which have increased by 6.57%.
The Social Security System has registered a deficit of 657 million, which represents 0.06% of GDP. The deterioration registered to date responds, on the one hand, to a decrease in state transfers by 2,656 million. Social benefits grew 5.8% until March compared to 2.8% registered the previous month, and income from social contributions increased 1.8%, with a decreasing trend since January.
The State Public Employment Service presents a surplus of 175 million. Social security contributions grew by 2.7% compared to unemployment benefits, which increased by 14.2% until March.
The evolution of this heading is affected by the various measures adopted in the Royal Decrees promulgated on the occasion of COVID-19, among which the suspension of contracts and reduction of working hours due to temporary force majeure (ERTES), the exoneration of the company of the payment of the business contribution and of the quotas for concepts of joint collection, and the recognition of the contributory unemployment benefit to the affected workers while this situation lasts.
The number of beneficiaries of unemployment benefits has increased in March by 15.2% compared to the previous year, a rate that is almost 10 points above the increase registered in February. If it is the number of beneficiaries at the contributory level, the rate of increase is 28.9%, while that of the care level is 8.6%. Finally, mention should be made of the 1.2% increase in production subsidies to stand at 597 million.
Finally, FOGASA records a surplus of 16 million euros, compared to 55 million in the same period of the previous year.