The Government’s decision to renounce the presentation of the general state budgets (PGE) after the early elections in Catalonia will force it to look for new parliamentary and accounting formulas to implement the main economic measures scheduled for this year. There are dozens of ongoing initiatives that are now up in the air or, at least, pending progress. They range from the forgiveness of the debt of the Autonomous Liquidity Fund (FLA) to the entry of the SEPI into Telefónica, through the fiscal adjustments related to the extraordinary tax on energy companies or aid for the purchase of electric cars. The Government recognizes that it will have to find alternatives, but it reduces the drama of the situation. Treasury sources remember that Pedro Sánchez governed between 2018 and 2021, with a pandemic in the middle, with no other budgets than those he had received as an inheritance from Mariano Rajoy. He did it, yes, with a somewhat more manageable parliamentary scenario.
The Minister of Finance, María Jesús Montero, acknowledged yesterday that giving up the budgets “was not in the equation”, while the Minister of Economy, Carlos Body, launched two messages trying to dispel the main fears: European funds are not in danger and the Government remains committed to placing the public deficit at 3%. The idea is now to take advantage of the work already done to prepare the 2025 accounts in the autumn.
Without a budget law, the Government will have to look for new legislative vehicles for measures such as the forgiveness of nearly 60,000 million euros of regional debt, the result of the investiture agreements to alleviate Catalonia’s obligations with the FLA by 15,000 million. In terms of national accounting, it also requires an extraordinary transfer to the autonomous communities whose natural route is the budgets. The ideal avenues would have been the budget law or a reform of regional financing that is still far from being realized.
Diego Martínez, professor at the Pablo de Olavide University and researcher at Fedea, also warns that without budgets the payments on account to the autonomous communities cannot be updated, although he considers that there will be no treasury tensions because the Treasury plans to transfer the liquidation of the 2022 in July, which will be a record, of about 20,000 million euros.
There are at least two fiscal measures that, like the FLA debt, were going to be included in the budgets and require approval through a law. One is the review of the extraordinary tax on energy companies so that investments in decarbonization can be deducted. The measure counters Repsol’s threat to paralyze projects in Spain and responds to a commitment from the Government at the end of the year to include it in the budgets. The intention is now to resort to a decree law for urgent matters or to a bill to adopt it.
Also at stake is the possible approval of tax incentives for the purchase of electric cars, which must be included in a law. The Anfac manufacturers association has been calling for them for some time to encourage a market that has not just taken off. Furthermore, the current Moves plan ends in the middle of the year, and the Government must decide whether to expand it by using recovery funds, without the need in this case to go through the Congress of Deputies.
There are other items of expense that, in the absence of budgets, will have to be accommodated. One of them has to do with the ministries’ own budgets. There are two new departments, Digital Transformation and Children, and they run the risk of being left without a specific provision.
Another issue that remains in the air is the purchase of 10% of Telefónica through SEPI for nearly 2,000 million euros. Since the Government ordered the public holding company to take over the stake, a special allocation in the budgets for SEPI was proposed as the first option, whose debt of 3,000 million euros prevents it from facing the effort with its own resources. The Government must now look for alternatives.
The lack of budget also opens up a mystery about defense spending. Amid growing pressure from the United States for military spending by NATO countries to reach 2% of GDP, Defense Minister Margarita Robles announced that her department’s budget will continue to rise and will reach 1.3% this year. year, compared to 1.2% in 2023, which implies reaching about 19,000 million euros. It is the star item when it comes to budget spending. Sources from the military industry assure that the Executive would have other mechanisms available to increase the amount, such as increasing the allocation of special weapons programs (PEA).
The absence of budgets also forces the Government to use extraordinary mechanisms to update social spending items. This is the case of possible increases in dependency, such as those that have occurred in recent years. The Government has decided to update the salary of civil servants through an amendment introduced by the PSOE in the aid bill that is being processed in Congress.
