Madrid (EFE).- The Independent Authority for Fiscal Responsibility (AIReF) calculates that the orientation of the European Commission to place public debt on a continuously decreasing path could require Spain to make a fiscal adjustment of up to 30,000 million in four years.
The president of AIReF, Cristina Herrero, specified this Thursday in the presentation of the report on the Stability Program that this adjustment is not a recommendation from the institution, but a theoretical exercise to apply the guidelines of the Commission on future fiscal rules still pending approval.
Deficit below 3% of GDP
Herrero explained that these Commission guidelines suggest that the stability programs must place the public deficit below 3% of GDP and the debt “on a continuously decreasing path” in the medium term “with a sufficient degree of plausibility”.
The president of AIReF has warned that, in the absence of new approved rules, it is unknown what “continuously decreasing” means or to what extent the Commission is going to demand that the programs comply with the “spirit” of the future reform.
Despite this, he believes that this “spirit” involves keeping the debt on a downward path not only for the four years of the program -which is fulfilled in the Spanish case- but for a decade beyond, something that according to his forecasts will not be complies.
AIReF estimates that, without additional measures, the Spanish public debt would grow again from the 1930s as a consequence of the effect of aging, for which reason it would be necessary to apply additional adjustments to keep it on a “continuously declining” path.
This adjustment, when the criteria of the Commission on AIReF’s debt forecast are applied and in an adverse environment of deterioration of the relationship between interest and growth, would amount to 0.46 annual points of GDP for four years, which would increase the cumulative impact up to about 30,000 million euros.
On the other hand, if it is applied to the more optimistic government debt forecast, the adjustment would be lower, 0.3 points of GDP, also in the adverse scenario.