Spain's Cabinet has taken the first step towards drawing up the Budget for 2023 by approving a spending ceiling – the maximum that administrations can assume, except for debt or credits to the Social Security – which is close to 200 billion euros. It does so with a view to the various elections that will take place in 2023, which will be very much centred on regions and local councils. The exact figure, 198,221 million euros, is a record for Spain, and is 1.1 per cent higher than that set for this year. Despite this increase, Finance Minister María Jesús Montero, insists that this record "will not prevent Spain from continuing to reduce the budgetary imbalances”.
The Treasury will give more leeway to the autonomous regions and local councils, as well as to the Social Security department, to increase their spending, although it will do so at the expense of the central government. "We see a different distribution of budgetary efforts", Montero said. In fact, the deficit margin of the communities will be 0.3 per cent compared to the current 0.1 per cent.
"The government is making a greater effort to ensure that the communities have greater spending capacity," Montero said. It is doing so in order to draw up public accounts that will be in force in the middle of an election year, in which regional and local elections are due to be held at the end of May 2023. Local councils will also have more room for manoeuvre as their budgetary and deficit capacity will be increased, as will that of the social security department, which will be injected with a payment of almost 20,000 million euros.
Despite this outlay, the Treasury insists that Spain will reduce the public deficit in 2023, as it has been doing since the record set in 2020 by the pandemic, when it was well over 10 per cent. The executive's calculation is to cut the deficit to 3.9 per cent of GDP next year, compared to the 5 per cent it estimates it will close at in 2022, and 6.8 per cent in 2021.
"We maintain our commitment to Brussels," Montero said. "The fiscal rules are still suspended, but fiscal responsibility is not," the finance minister explained, referring to the freedom that states still enjoy vis-à-vis the EU to avoid having to meet the historic 3 per cent deficit target, which for now is not visible in the government's medium-term forecasts, despite having reduced it by 60 per cent since the worst period of the pandemic.