The budget balance reached by the regional accounts in 2021 was a lie. A report released yesterday by the Fedea think tank concludes that the 0.03% deficit in regional administrations reported last March by the Ministry of Finance is highly fictitious and is based on the abnormal injection of resources they received from the State in both 2020 and 2021 through the so-called Covid funds.
Without this exceptional financial support, by virtue of which the regional governments received in those two years 7,000 million euros more than they really needed to cover the exceptional expenses caused by the pandemic -according to Fedea’s calculations- and without the effect of the rest of instruments that the Central Government has been disposing of in recent years to protect the delicate finances of the autonomous communities from bankruptcy, the imbalance of the regional accounts in 2021 exceeds 10,000 million euros.
“The price is, of course, a greater deficit of the State”, maintains the report prepared by the executive director of the ‘think tank’, Ángel de la Fuente, “and the gradual weakening of the fiscal responsibility of some autonomous communities that are being overprotected, both in this crisis and in the previous one.
It is not the approach of the Minister of Finance, María Jesús Montero, who has defended the additional financing provided to the autonomous communities and even their ease in the need to wade through the pandemic crisis without affecting either social services or health or The education. Under this argument, she has justified an injection of resources of 16,889 million euros in 2020, despite the fact that the autonomous communities only recognized extra expenses for the pandemic of 13,951 million; and an additional injection of 23,203 million, including European funds, in 2021 to cover spending needs of 19,051 million, which has generated a surplus of 7,000 million in these two years.
The movement has generated the perception that the health of regional finances has improved in this period, which according to Fedea does not respond to reality. While official Treasury data shows a progressive approach towards budget balance in the years of the pandemic, the ‘underlying deficit’ built by Fedea by eliminating the impact of all the protection measures enabled by the Government reveals that it has doubled since 2018 towards today.
It is not just about the exceptional injection of covid funds. Fedea also takes into account the funds received to support the productive fabric most affected by the pandemic, those from the Recovery and Resilience Mechanism, the extra funds received for the special generosity applied by the Government in payments on account and the financial expenses saved by the financial shield of the Autonomous Liquidity Fund and the Financial Facility, which allows them to finance themselves at a significantly lower cost than they would have to bear if they went to the market on their own.
«As in 2009, the Government has chosen to protect the autonomous communities as much as possible from the immediate effects of the crisis, which is not necessarily a good idea if it excessively delays their reaction. For the time being, the Government has decided to forgive those settlements for 2022 that are negative, which poses additional problems, both of equity and of incentives,” concludes Fedea.
