SANTA CRUZ DE TENERIFE, 28 Oct. (EUROPE PRESS) –
AIReF’s forecasts for the Autonomous Community of the Canary Islands in 2022 are the same as in the previous report, predicting a deficit of 0.6% of GDP, one tenth higher than estimated by the community, according to an AIReF report on the project and the fundamental lines of the Budget of the Autonomous Community for 2023.
AIReF incorporates in its estimates, among other elements, the additional salary increase of 1.5% recently approved for public employees. The forecasts of the community, for its part, worsen one tenth, estimating that it will reach a deficit of 0.7% of GDP in 2022, under a slightly lower evolution of resources than that estimated by AIReF.
For 2023, AIReF forecasts a surplus of 1.1% of GDP, while the community estimates to reach balance in the lines presented. The balance of the community in 2023 will improve substantially compared to that expected in 2022, 1.7 points of GDP, according to AIReF estimates. This improvement will be produced fundamentally by the evolution of the system’s resources, which register the positive liquidation of 2021 over a very moderate level in 2020 and allow to absorb this year the expected growth in expenses and the more moderate growth of other income. The community expects a smaller reduction in the deficit, seven tenths from its scheduled closure in 2022, under a scenario of evolution of income and, to a lesser extent, of expenses more moderate than that estimated by AIReF.
AIReF forecasts that the income of the community in 2023, without taking into account the PRTR funds, will increase by 12%, reaching 25.3% of GDP. The 23% increase in the resources of the financing system compensates for the non-repetition of the extraordinary compensation received from the State in 2022 (settlement of the VAT SII in 2019).
A 7% increase in tax revenues is expected, slowing down its growth; and a slight drop in the rest of the resources, which recorded the reduction in European funds, offset in large part by the higher transfers from the State included in the PGE project destined for education (School 4.0), primary care, culture and other lines.
The community plans certain tax reductions, some of a temporary nature, which will have an impact on their income as of 2024. The community plans to approve reductions in the personal income tax rate, as well as bonuses for situations of special vulnerability to inflation, for years 2022 and 2023, which would have transfer in terms of lower regional income in 2024 and 2025. For 2022, it is planned to create a temporary extraordinary deduction to mitigate the effects of inflation, which would also have a negative effect on the income of the community in 2024. On the other hand, the tax reductions associated with the urgent measures to mitigate the socioeconomic effects of the La Palma volcano eruption, articulated in the 2022 budgets, would have a negative effect on collection of close to 5 million euros.
The community estimates to reach a substantially lower level of resources in 2023, due to more pessimistic forecasts for the evolution of tax revenues and other resources. The scenario of fundamental lines submitted by the community foresees a much more moderate evolution than that estimated by AIReF in tax revenues and other revenues not associated with PRTR (in particular, those from European funds and those associated with the production). These forecasts place its global level of resources well below that forecast by AIReF.
According to AIReF forecasts, regional spending in 2023, without considering those financed by the PRTR, will increase by 5% over the previous year, standing at 24.1% of GDP. Current jobs outside the PRTR projects will increase in the community above 4%. The updating of salaries derived from the basic state regulations will lead to a growth of 4% in the remuneration of salaried employees, which represents more than 40% of regional jobs. Significant growth is also expected in operating expenses and those associated with concerts, especially affected by the expected inflation and the updating of salaries, and those destined for families, due to the increase in dependency benefits co-financed by the State. AIReF expects that capital expenditures not associated with the execution of the PRTR will increase due to the application of the higher transfers from the State registered in the PGE project.
The community estimates that in 2023 it will reach a level of expenditure lower than that forecast by AIReF. The regional forecasts estimate in budgetary terms a more moderate growth in personnel expenses than that forecast by AIReF, which incorporates the salary update derived from the PGE project for 2023. In the rest of the jobs, in general, there are also evolutions more moderate than those estimated by AIReF.
AIReF considers that the computable expenditure for the purposes of the expenditure rule will increase in 2023 by around 7%. Based on the current estimates of jobs, finalist transfers from the State and income from EU funds, AIReF estimates that eligible spending in the Autonomous Community of the Canary Islands could increase by 2% in 2022 and more sharply in 2023, up to 7%.
The growth of computable spending would be slightly lower under the regional estimates. If the spending growth forecasts included in the regional lines, more moderate than those of AIReF, are met, in 2023 the computable spending for the purposes of the spending rule could grow by 6%.
REACT-EU FUNDS AND RECOVERY PLAN.
According to AIReF estimates, by 2022 almost 80% of the REACT-EU funds allocated to the community would have been executed in the Canary Islands. The execution data published to date, corresponding to the month of July 2022, show a high record of income from European funds, which suggests that at the end of 2022 almost 80% of the funds allocated to the community by REACTEU (630 million euros).
On the other hand, AIReF estimates that the execution of the PRTR in 2023 will be much higher than that of 2022. The AIReF revises downwards the expected execution in 2022 of the funds associated with the PRTR, for which it estimates in the community an expense to closure of 0.6% of regional GDP. It is expected that in 2023 the greatest application of these funds will be concentrated in the period, which could reach 1.3% of GDP.
MEDIUM-TERM OUTLOOK (2024-2026)
In the medium term, AIReF estimates the maintenance of the community surplus in the 2024-2026 period. The improvement in the balance estimated for 2023 is accentuated in 2024 to a situation of surplus which, although temporary this year as it is based on the exceptionally positive liquidation of the financing system, could be maintained in the following years under an inertial evolution of the rest of the income and expenses.
In this period, the resources of the Autonomous Community of the Canary Islands will show a descending profile conditioned by the regional financing system. The liquidations of the financing system will imply that the community will receive temporary income in 2024 and 2025 originated by the growth of the collection of 2022 and 2023 above that foreseen in the PGE. The income of the financing system for 2023 experiences an increase of 23% over the previous year and for 2024 AIReF forecasts that these resources will grow by more than 10%. Its growth is moderated in 2025, while in 2026 a normalized level of system resources is expected together with an inertial growth of the rest of income.
