Fiscal and Financial Policy Council approves new deficit and debt targets for regional government for 2016 and new path for 2017-2019

The CPFF approved the new budget stability targets proposed by the government for the regional governments for the financial year 2016. The public deficit target for this year has been set at -0.7% of national GDP, which is the same percentage as was approved by the CPFF back on 28 April and contained in the Budget Plan presented to the European Commission on 14 October, but which could not be approved by the Spanish Parliament as it had been dissolved on 3 May. This goal is more than double that which was originally set, of -0.3%.

The Minister for the Treasury and the Public Function, Cristóbal Montoro, who chaired the meeting of the CPFF, also presented the budget stability and public debt targets for the three-year period 2017-2019. The path approved for the regional governments for this period is as follows: -0.6% of GDP for 2017, -0.3% of GDP for 2018 and 0% of GDP for 2019.

In this regard, the minister recalled that this CPFF meeting offers continuity to those held on 15 and 28 April and that the modification to the deficit and debt targets are framed within the measures that must be adapted in relation to the regional governments as a result of the decision taken by the European Council on 8 August. He also pointed out that the more moderate consolidation path for this sub-sector must be accompanied by adjustment measures to be adopted by the regional governments themselves in application of the Constitutional Law on Budget Stability and Financial Sustainability.

On another note, the CPFF approved the public debt target for the autonomous regions as a whole for the financial year 2016, in line with the new budget stability targets. This has been set at 24.4% of national GDP for this year.

For the three-year period 2017-2019, the public debt targets for the autonomous regions as a whole have been set in the following terms: 24.1% for 2017, 23.6% for 2018 and 22.7% for 2019. The public debt figures established for autonomous regions as a whole for 2016 can be corrected by the effective amount of the performance of the additional financing mechanisms during the year, provided that this amount is not allocated to finance debt maturities or the deficit for the year. For the purposes of meeting this target, exceptional circumstances may be taken into account which, whilst not affecting the deficit target or compliance with the ceiling on spending, may affect the limits on debt, which do not derive from discretionary decisions taken by regional governments, in accordance with guidelines from the Ministry of the Treasury and Public Function.

For the three-year period 2017-2019, the effective amounts of the performance of the additional financing mechanisms may be corrected for those regional governments during the respective financial years, provided that these amounts are not allocated to finance debt maturities or the deficit for the year in which they take place, or for debt increases deriving from the reclassification of public institutions and bodies in the public administration sector, as long as they do not finance the deficit for the year.

Lastly, the minister offered information on the degree of compliance with the budget stability and public debt targets and with the ceiling on spending for the regional governments in 2015, as well as the development of the CPFF's Agreement 5/2012 in the re-organisation and streamlining of the regional public sector and the control, efficiency and reduction of public spending managed by this sector.