Spain has been dragging its debt and deficit duties for years. And the crisis of Covid-19 it has only delved into this structural problem in the face of the huge increase in spending and the reduction in income due to the pandemic. He International Monetary Fund (IMF) puts figures to disaster in the balance of public accounts: the deficit will skyrocket this year to 14.1% and the debt will do so to 123% of GDP. The fiscal hole will thus exceed the 155 billion this year.
Record figures not seen in about a century in our country. What the 2008 financial crisis the coronavirus drama is achieving it in just a few months. However, there are ways and means to estimate the public gap. The Government explained last week that they expect a deficit for this year of 11.3%, which is 2.8 points (31.3 billion) less than the IMF. This difference already occurred on Tuesday when the international institution released its macroeconomic forecasts. This predicts a 12.8% drop in GDP (the same as what it expected in its June update) in 2020 and the Sánchez Executive bet on 11.2%. Obvious differences in the picture for Spain, the Government being the most optimistic and which was already questioned by various experts last week. In addition, the economists consulted point out that the statistics of the Executive have been quite short and are not credible. For example, they refer to all the estimates available to date: none of the most relevant is so optimistic.
This is in the short term, but in the future the outlook is not hopeful either. If Spain already has a structural deficit of around 3%, the pandemic does not help to correct this problem. Spending will continue to increase and it will cost tax collection to go up. Therefore, the IMF estimates that it will not return to pre-crisis deficit levels until at least 2026.
The Fund estimates that the lag will be 7.5% in 2021; from 5.8% in 2020; 4.7% in 2023; from 3.9% in 2024; and 4.4% in 2025. In 2019 it was 2.8%. In the case of the Government, the estimate for next year is 7.7%, two tenths more. Even so, the Minister of Finance, Maria Jesus Montero, recently announced the suspension of fiscal rules until 2022, which will give more room for maneuver to the accounts.
In the case of debt, all analysis houses and organizations take for granted that it will not be possible to contain it in the face of increasing needs. If for this year it is expected to rise to 123% of GDP (the Government estimates 118%), by 2021 it would be 121.3%; in 2022, at 120.1%; in 2023 at 119.3%; in 2024, at 118.1%; and in 2025 at 118.8%. He Bank of Spain He said three months ago that public indebtedness will lock into 130% of GDP in the 2030s if structural adjustments are not made.
The anomaly of public spending over GDP
Likewise, the IMF gives a good account of an anomaly that has also brought this crisis: while the usual thing in the recent history of Spain was that public spending over GDP was around 35-45 percent, the Covid will shoot the weight of administrations on national wealth to 52.7% this year. More than half of the economy will have its reason for being in the public coffers. On this point he already warned BBVA Research two months ago, while pointing out that if measures are not taken there is a risk that this situation will become chronic.
Regarding the expected income, the international institution calculates that this year they will remain at 38.6% of GDP, to rebound to 40.5% in 2021 and 2022. The figures do not give and the deficit and debt data appear there.