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MINHAC agrees with most of the recommendations aimed at reviewing certain aspects of the definition and implementation of fiscal rules and the application framework set out in the Organic Law on Budgetary Stability and Financial Sustainability (LOEPSF)

Despite this, it considers it difficult in the current situation to undertake a reform that would require a broad consensus

AIReF publishes the follow-up of the recommendations made in the reports prepared in the second quarter of the year.

In accordance with the principle of complying with or explaining administrations are obliged to, or follow the recommendations of AIReF, or explain the reasons for which they deviate from them, giving rise to a constructive and transparent dialogue between this institution and the competent administrations.

In the second quarter of 2018, the AIReF issued reports both of general scope, for the set of Public Administrations and their subsectors, and individual, in the case of Territorial Administrations.

In particular, it informed the draft General State Budgets for 2018 and its macroeconomic forecasts;

the initial budgets for 2018 of both the Autonomous Communities and the CCLL;

the Update of the Stability Program 2018-2021 and the Financial Economic Plans (PEF) of Aragon, Principality of Asturias, Castilla y León, Castilla-La Mancha, Catalonia, Extremadura, Madrid, Murcia, La Rioja, the Basque Country and the Valenciana

As a result of its evaluation, AIReF formulated 47 recommendations, of which 28 were new and 19 reiterated on topics for which AIReF considers it necessary to keep the dialogue open.

All affected Public Administrations have replied stating their intention to comply or explain, with the exception of the municipalities of La Linea de la Concepcion, Totana, Navalcarnero, Ayamonte and Almonte.

Of the recommendations made, 80% were aimed at improving the fiscal framework, while the remaining 20% ​​were directed to specific territorial administrations with the aim of adopting actions that would allow compliance with the fiscal rules at the end of the year.

This greater proportion of recommendations of a general nature, whose main recipient is the Central Government, highlights AIReF's commitment to the existence of a robust, transparent fiscal framework oriented towards the medium term.

For this, AIReF differentiates two levels: on the one hand, recommendations of a more structural nature, aimed at reforming the fiscal framework after more than 6 years of application of the LOEPSF, and, on the other hand, recommendations of a more immediate nature, aimed at introducing improvements in its application.

Among the first, are those related to the need to ensure the consistency of fiscal rules and the incorporation into the fiscal framework of those aspects that are subject to transitory regulation in legal provisions other than the LOEPSF.

Regarding the latter, the development of a medium-term budgetary framework with sufficient information and greater participation of the agents involved, the establishment of realistic fiscal rules and coherent with the fiscal situation of public administrations, and greater transparency in terms of the spending rule.

In general, the Ministry of Finance has shown its agreement with the need to review certain elements of the current rules and the LOEPSF, although it has pointed out the difficulty of undertaking a reform at the present time that requires a broad consensus.

In this regard, AIReF recognizes the difficulty of carrying out a reform of the LOEPSF at this time, but considers that it is important to move forward in complying with the most practical and immediate recommendations that would improve the application and enforceability of the current fiscal framework. and with it its credibility.

In addition to these recommendations, it is worth mentioning others, among which are those aimed at municipalities with medium-term sustainability risks to adopt measures that help redirect their situation, or to the Autonomous Regions with the risk of deviating from the spending rule for that they design mechanisms of immediate correction before deviations of the expense.

Source: AIReF