The imminent rise in interest rates is going to increase the financial burden of the public debt and, specifically, it will increase the interest on the public debt by 12,000 million in 2025. This is how he explained it Christina Herreropresident of the Independent Authority for Fiscal Responsibility (AIREF), during his speech at the XXXIX APIE Seminar. Sustainability and digitization: the levers of recoveryorganized by the Apie and BBVA.

And it is that the tightening of monetary policy in response to runaway inflation is already having a strong impact on the yields of sovereign debt, which is going to translate into a higher financial burden.

More specifically, the president of the Authority has stated that an increase in the average issuance rate of more than 100 basic points is expected, which would raise the implicit rate forecast by three tenths (up to 2.3%), four tenths of GDP the financial burden (up to 2.4%) and more than 12,000 million euros in interest expense in 2025. Between now and that year, the burden will increase by 20 billion.

tax strategy

On the other hand, Herrero has highlighted once again the importance of having a medium and long-term fiscal strategy both in the sphere of the Government and in that of the autonomous communities.

“I think that the uncertainty is not going to disappear, what has happened is that it has moved from the health field to other areas. This cannot mean that there is no such planning,” said the president of the Authority.

Herrero has been forceful in pointing out that uncertainty is no excuse for not having a deficit reduction strategy in both the medium and long term. “Many times we trust everything to see what Europe says, we would have to have a self-disciplined execution (…) The uncertainty is not worth it, it is the uncertainty that we have to overcome“, has said.

In fact, he recalled that last year the Spanish economy closed with a deficit one and a half points lower than forecast by the Government, but “the objectives for the following years have not been changed”. “This planning is necessary,” she reiterated.

Don’t add uncertainty

“The argument that they have been telling us from the first moment that we asked for this strategy is uncertainty. It is not so much abandonment, but rather they say, and it is partly true, that it is not easy to plan in an environment of uncertainty. But as the degree of uncertainty is very high, the action of the public administrations cannot add more uncertainty“, has said..

In another order of things, Herrero has stated that AIReF does not have sufficient information from the Government to assess what the impact of the Recovery Plan will be on the public accounts.

Once again, the Government’s justification is that “there is sufficient information”, although, according to the Authority, it is “very disaggregated and scattered” information.

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J. A. Allen

Author, blogger, freelance writer. Hater of spiders. Drinker of wine. Mother of hellions.

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