This is the first General State Budget to be presented since the start of the crisis with a primary surplus of 0.35 points of GDP, meaning that the ratio of public debt over GDP will continue to fall.
The General State Budget for 2016 is based on the same objectives as the four previous budgets drawn up by the Government of Spain during this legislature: economic growth, job creation and meeting fiscal consolidation commitments. The State Secretary for Budgets and Expenditure, Marta Fernández Currás, said today that these commitments will also be met in 2015, as she announced the positive results from the budgetary performance data to be released next week, which show a reduction in the deficits posted by both the Central Government and the regional governments. They also reflect the excellent health of the local authority accounts. "We are on the right path to meeting our stability target", she said.
Marta Fernández Currás spoke on Wednesday in the Upper House of Parliament to report on the main objectives in the General State Budget for 2016, highlighting the radically different macroeconomic situation for the Spanish economy now compared with previous years. "The Spanish economy is growing and creating jobs faster than other countries in our peer group and, perhaps most significantly, the recovery is being characterised by intense job creation results", she said. In this regard, she stressed that economic growth in 2016 will stand at 3% and this figure has been the basis for drawing up the General State Budget for the year.
In this regard, she highlighted the positive trend in the economic indicators for the first half of the year, which show that the Central Government has reduced its deficit by almost 15%, that the regional governments have achieved a deficit reduction of almost 20% and that the local authorities have doubled their surplus. The consolidated data corresponding to the month of July - which exclude the local authority surplus - confirm this reduction (with an adjustment of close on 15%), while the data on the month of August for the State accounts reflect significant growth in tax revenue, enabling a State deficit reduction in excess of 20%.
"These figures from the first half of the year, together with the available data from those to be released and published on Tuesday regarding the second half of the year, indicate that we are on the right path for meeting our stability target", she said.
Furthermore, she stated that the indicators on the second half of 2015 "are even more positive", reflecting that the consolidation is speeding up as the months pass. In this regard, she stressed that tax revenue has comfortably offset the impact caused by lowering taxes due to increased taxable bases stemming from the positive situation in the economy and employment figures. "Contrary to the opinion of critics, tax revenue is absorbing the tax reduction", she added.
She went on to say that expenditure is performing well, with decreases under the largest headings - spending on interest and unemployment benefits - and an overall containment under all expenditure headings, which are growing slower than nominal GDP.
This positive performance by tax revenue is reflected in the General State Budget for 2016 and enables the deficit reduction commitment to be maintained while concluding the tax reform by undertaking the second stage of Corporate Income Tax reductions to 25% and continuing the reimbursement of efforts asked during the first years of this legislature, particularly to public servants.
The State Secretary explained that another fundamental feature of the General State Budget for 2016 is the significant increase in resources transferred to the regional authorities. They will receive an additional 8.01 billion euros in 2016 to finance essential public services and improve their ability to meet the budget stability targets.
Finally, she highlighted the ongoing public spending control policy "that has produced such good results" and that will allow the public authority deficit to stand at 2.8% of GDP (below the 3% set by the Stability and Growth Pact). This will mean that Spain can leave the Excessive Deficit Procedure.
Furthermore, the State Secretary stressed that this is the first General State Budget presented since the start of the crisis with a primary surplus of 0.35 points of GDP "and a growing primary surplus and nominal GDP, the ratio of public debt over GDP will continue to fall, the early signs of which can already be seen in the latest data published by the Bank of Spain for the second quarter".
Active employment policies are another priority and have received an increase of almost 10%, while credit facilities aimed at supporting the unemployment policy (which have been reduced due to the positive trends in the labour market) have been given a provision of 19.62 billion euros, including the credit facilities for new economic assistance under the Activation for Employment Programme amounting to 426 euros per month for the long-term unemployed. Other policies receiving increased funding include the education policy (up 9.3%) and the civilian R&D policy (up 2.2%).
Marta Fernández Currás also defended the early passage through Parliament of the General State Budget for 2016 as a demonstration of "responsibility and good sense" by the Government of Spain aimed at continuing to offer security and foreseeability to economic players regarding the Spanish economy.
"This budget further develops the budgetary policy that helped us out of the crisis, closes a difficult period in the economic cycle and opens the door to a new period of sustained growth and intense job creation that it will be possible to maintain for a long time if managed within the same framework and with the same policies that have enabled its design", she concluded.
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