Thursday, February 29, 2024

The public deficit decreased to 27,631 million at the end of November, 1.89% of GDP

The deficit in all Spanish public administrations, except local, amounted to 27,631 million euros in the first 11 months of 2023, a figure 4.3% lower than the same period last year and equal to 1.89% of GDP.

The Treasury published this Wednesday the data on the implementation of the budget until November, which shows a public deficit far from the reference of 3.9% of GDP for the whole of 2023, although changes at the end of the year may change the figure.

The correction of the deficit is possible due to the increase in income of 7.7%, driven both by the advance of tax collection (6.4%) and social contributions (9.4%), which is higher than the cost increase of 6.9%.

As usual, between January and November, most of the public deficit was concentrated in the central administration, with 27,995 million, or 0.7% less and 1.91% of GDP, partly due to the contribution of new bank tax and strength, which makes it possible to offset the higher expenditure on wages and debt and the negative impact of autonomous liquidation.

It is precisely the effect of the liquidation of the autonomous financing system in 2021 that explains the good progress in the accounts of the regions, which reduced their deficit by 40.3% to 4,668 million, or 0.32% of GDP.

The autonomous financing system advances the regions of the resources it calculates to be equal to them based on the collection, and two years later it settles the difference, which will be positive (such as in the 2021 fiscal year, settled in 2023, which means new funds) or negative (as in the 2020 fiscal year, settled in 2022, which means returns).

In addition to this effect, between January and November 2023, the regions experienced a sharp increase in income by 6%—especially taxes, which grew by 14%—while their costs increased only by 4.3%.

Only seven autonomous communities registered a deficit: Andalucia, Castilla-La Mancha, Catalua, Extremadura, Madrid, Murcia, and the Valencian Community.

Regarding Social Security funds, they closed November with a surplus of 4,708 million, 23.2% lower than in 2022, equivalent to 0.32% of GDP, due to higher spending on pensions and employee wages, and despite the increase in social contributions and the implementation of the intergenerational equity mechanism.

The data on the implementation of the budget corresponding to the end of the 2023 financial year, the last suspended fiscal rules in Europe, will be known on March 27. In 2024, the government has promised to reduce the public deficit to 3% of GDP.

World Nation News Desk
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