SANTA CRUZ DE TENERIFE, 14th April. (EUROPA PRESS) –
The Minister of Finance for the Government of the Canary Islands, Matilde Asián, has highlighted that the most recent report from the Independent Fiscal Responsibility Authority (AIReF) supports the Canary Islands’ position as a region compliant with stability and debt targets. She emphasises that the report does not indicate any risks to meeting budgetary stability targets or exceeding the maximum 13% debt threshold that is allowed.
This statement follows the disclosure by AIReF last Friday of a report which raises concerns about the central Administration potentially not meeting fiscal regulations in the medium term, which would directly impact all autonomous regions.
AIReF’s analysis is based on a forecast showing a deficit exceeding 3% of GDP for the period 2024-2028, debt stabilisation above 100% of GDP, expenditure growth of up to 4%, and no GDP growth, expecting a decrease from 2% in 2024 to 1.5% in 2028. These figures, according to Matilde Asián, confirm “a concerning outlook for the Spanish government’s public finances.”
The Minister maintains that given this situation, and considering the stability targets set out in the 2023-2026 Stability Programme by the Spanish government, it will be challenging for Spain to adhere to the upcoming fiscal plan for 2025-2028, which is due in September.
Although AIReF predicts a six-tenths decrease in the 2024 deficit compared to 2023, it also points out that this reduction is due to the progressive removal of measures implemented to mitigate the impacts of the energy crisis and price rises. The Treasury Minister believes that the budget extension will not impact these forecasts, as the government has confirmed its intention to maintain other measures, such as a salary increase for public sector employees.
FORECAST FOR AUTONOMOUS COMMUNITIES
Similar to the central Administration, AIReF warns of the risk of autonomous communities failing to comply with the spending rule. In general terms, AIReF estimates that from 2025 onwards, the balance of autonomous regions will deteriorate until stabilising at around -0.2% of GDP.
Regarding the Canary Islands, the report forecasts a surplus of 0.8% of GDP in 2024. If the spending rule is adhered to, the region could achieve a surplus close to 1.7% of GDP.
Matilde Asián suggests that the Canary Islands face a choice regarding what to do with this surplus: either use it to pay off debt as per the spending rule, or allocate it to meet the region’s requirements. She is hopeful that there will be a unanimous decision in favour of the latter option.
As a general recommendation, AIReF urges the Canary Islands to monitor the growth of eligible expenditures, which are projected to exceed 8% in 2024, and implement necessary measures to address this growth.
AIReF also highlights a risk of non-compliance in 10 out of 25 major local entities examined. For 10 of these entities, the projected growth in eligible expenditures in 2024 exceeds 5%, posing a risk of breaching the reference rate. Entities such as the city council of Las Palmas de Gran Canaria and the Cabildo Insular de Tenerife are among those at risk.
