The International Monetary Fund (IMF) considers that the taxes approved by the Spanish Government on banks, energy companies and high-income households are “appropriate” in the current context, but warns that the Executive must make a “sustained” consolidation effort to reduce a level of debt which is still high.
“As energy prices are expected to remain high next year, raising temporary additional revenue to fund support for the most vulnerable is a welcome strategy, but monitoring the impact of measures is necessary“, the IMF technicians point out in the conclusions of their annual review of the Spanish economy, known as ‘Article IV’.
Specifically, it warns that it would be important to monitor the incidence that these new taxes may have on the availability of credit, the costs of credit and the resilience of banksas well as on investment incentives for energy companies.
[El FMI recorta al 1,2% el avance del PIB en 2023 y rebaja casi a la mitad las previsiones del Gobierno]
Also, the organization led by Kristalina Gueorguieva also stresses that these fiscal measures “dmust be temporary” and they should not be considered as a replacement for the necessary tax reform that Spain must carry out in the medium term.
In this regard, the IMF argues that develop credible medium-term fiscal plans in advance it could help “forge the necessary social consensus and shore up investor confidence.” Furthermore, he believes that this consolidation should be contingent on additional revenue mobilization and improved spending efficiency.
The IMF report warns that public debt remains high and sees a “sustained” consolidation effort necessary. Thus, he remarks that, although the government’s response was “very effective” in containing the effects of the pandemic, it was also costly by raising the debt-to-GDP ratio to 118%.
In this sense, the organization also considers the consolidation of the primary deficit of 0.3 percentage points “appropriate” foreseen in the provisional budget plan for 2023, although it warns that its execution is subject to solid income and less spending on energy measures.
In this sense, the International Monetary Fund warns that an adjustment of 0.6 percentage points per year is necessary from 2024 for Spain to achieve an almost balanced fiscal position by 2030.
Follow the topics that interest you