The Senate has definitively approved the objectives of budgetary stability and public debt of 2020. It has also ratified the path of stability for the period 2021-2023 presented by the Government. In this way, the parliamentary process is successfully completed after the Congress of Deputies also endorses the proposal of the Ministry of Finance on February 27.
The new path, which updates the one approved in 2017, adapts to the economic reality of Spain and allows progress in reducing the deficit and public debt without jeopardizing growth or job creation.
The Minister of Finance, María Jesús Montero, stressed that the stability objectives approved today are "prudent and realistic" while configuring a more passable path, which makes compatible the sanitation of public accounts and compliance with fiscal rules of the European Union, with the strengthening of the welfare state and the recovery of citizens' rights.
Likewise, the new path of stability lays the foundations for the elaboration of the General Budgets of 2020, which will include the Government's priorities to promote redistributive policies and quality public services, in addition to betting on social and fiscal justice under the premise of leaving no one behind.
Specifically, after completing the parliamentary process, the deficit target in 2020 for all Public Administrations is set at 1.8% of GDP. By subsectors, the Central Administration limit is 0.5%; for the Autonomous Communities of 0.2%; for Social Security 1.1%; and budget balance for Local Entities.
With this distribution, the greatest fiscal effort falls to the Central Administration, which will reduce its deficit from 1.32% recorded in 2018, to 0.5% in 2020. That is, a reduction of eight tenths in two years. For its part, Social Security has to reduce its deficit from 1.44% to 1.1%, which implies a decrease of three tenths. However, the effort required of the Autonomous Communities is less than just one tenth.
On the other hand, the path of stability of the period 2021-2023 establishes a deficit for all Public Administrations of 1.5% in 2021; 1.2% in 2022; and 0.9% in 2023.
The distribution by subsectors implies that the Central Administration reduces its deficit to 0.1% in 2023. The Autonomous Communities reduce their deficit one tenth each year until they reach equilibrium in 2022 and 2023. Budget balances are contemplated for Local Entities during the entire period 2021-2023. Finally, Social Security will reduce its deficit more moderately to 0.8% of GDP in 2023.
Public debt and spending rule
Likewise, the minister highlighted in her speech that Spain will continue to reduce public debt after having closed 2019 at 95.5% of GDP, the lowest level since 2012. This significant decrease has allowed the 95.9% objective to be met. thanks to a reduction of 2.1 percentage points, the highest rate of reduction since 2007.
Specifically, the 2020 target for all Public Administrations is set at 94.6% and will be reduced to below 90% (89.8%) in 2023.
Finally, the agreement ratified today in the Senate contemplates the rate of variation for the purpose of complying with the spending rule that will be 2.9% in 2020 and will increase to reach 3.3% in 2023.
