The Government of Pedro Sánchez has passed his first exam in the Congress to launch the presentation of the General budget of the State of 2022. The Plenary of the Congress of Deputies has extended the suspension of fiscal rules for next year, arguing the emergency caused by the Covid-19 pandemic.
To overcome the vote, the Government has obtained the votes of PSOE and United We Can and in addition to Esquerra Republicana, Ciudadanos, the PNV, EH-Bildu and the PDeCAT. Vox and Foro Asturias have positioned themselves against, while the PP, UPN, CUP and BNG have opted for abstention.
This approval also implies that the Executive carries out the non-financial spending limit, known as the spending ceiling, established at 196,142 million euros, as reported to the Lower House by the Minister of Finance and Public Function, María Jesús Montero. A historical record that equals the figure registered in the PGE of the current year.
As Invertia has already advanced, this means giving the starting signal to process the 2022 Budgets. Now the Government must focus on closing the fringes of the PGE 2022 and get the necessary political support to move them forward.
Agreed with Europe
One more year, the Executive leave tax rules suspended -previous agreement with Brussels– and thus avoids having to submit to the approval of Congress the deficit and public debt limits with which the spending ceiling approved by the Council of Ministers last July is built.
As in 2020 and 2021, the European Comission has proposed that the rules limiting the deficit and public debt of the member states remain suspended in 2022 and reactivate again in 2023, once the European economies have recovered their level of GDP prior to the crisis caused by the coronavirus pandemic .
The suspension of fiscal rules is covered by articles 135.4 of the Constitution and 11.3 of the Budget Stability Law.
Despite the suspension of fiscal rules, the Government assures that, as conditions permit, budgetary policy, which will continue to be expansionary next year, will be reoriented towards “more prudent” fiscal positions that reaffirm the sustainability of the fiscal policies. public finances in the medium term. Thus, for 2022 it contemplates one of “the largest decreases in the public deficit”, from 8.4% in 2021 to 5% in 2022.
Before going on vacation, the Government set that cap at 196,142 million euros, a record figure and almost similar to 2021 that Brussels authorizes to meet the extraordinary expenses derived from the crisis that the pandemic has generated on the health, economic and social front.
This figure includes the absorption of a new package of European funds (26,355 million euros), in addition to the transfer of additional resources for Social Security and the rest of the subsectors (autonomous communities and local entities). However, that agreement also included reduce the public deficit by more than half in two years, to reach 5% in 2022.
In a normal situation, these figures would have to undergo the Congressional vote to comply with the Budget Stability Law. However, in this case, alluding to the ‘catastrophe’ caused by the pandemic, the Executive will choose to vote on the exception that allows suspending the fiscal rules.
The Government also maintained its forecast for a public deficit, predicting a mismatch of 8.4% of GDP this year, and established a deficit reference rate of 5% in 2022. The minister has already advanced that in two years the deficit will be it will have reduced more than 50%.
PGE in Congress
By subsector, the central administration will continue to assume most of the public deficit and will account for 6.3% of the total this year and 3.9% next, while the deficit reference rate for the autonomous communities stands at 0 , 7% this year and 0.6% in 2022 and for the municipalities it will be balanced in both years. In the case of Social Security, the deficit reference rate will be 1.5% this year and 0.5% the next.
The Constitution states that Budgets must be in Congress before September 30, but in recent years this obligation has been systematically breached. Although this vote takes place next week, the government may not be able to meet the deadlines this year either.
In any case, as explained by the President of the Executive, Pedro Sánchez, at the Casa de América two weeks ago, his intention is to bring the PGE to Congress between the end of September and the beginning of October. Sánchez baptized these Budgets as the tool that will consolidate a “fair recovery.”