The Independent Authority for Fiscal Responsibility (AIReF) has shown its “surprise“that the Government has not included the cost of the minimum vital income that it plans to approve this month in the Stability Program sent to Brussels last week, and indicates that the cost of the measure of some 3,000 million euros estimated by the Executive is “quite similar” to that initially calculated by AIReF, although it will recalculate the impact when the details are known.
This has been pointed out by the president of AIReF,Cristina Herrero, during the telematic presentation of the Stability Program 2020-2021 Report, which predicts a deficit of between 10.9% and 13.8% of GDP this year depending on whether there is a recurrence of the pandemic, compared to the 10.34% calculated by the Government in the program, which does not include the impact of the cost of the minimum vital income that it plans to approve this month.
“It is surprising that an average that willcome into forceso quickly it has not been included in the Stability Program, “said Herrero, who explained that the study on minimum incomes carried out by AIReF included an estimate of the cost higher than that now estimated by the Government because the initiative was being evaluated The popular legislature, which focused less on severe poverty, did not have the household as its reference unit, but rather the individual, and was incompatible with employment, however, this initiative is “very different” from what appears to be will implement the Government.
In detail, AIReF placed the cost of theILPon minimum income in about 11,000 million euros, although Herrero has pointed out that the proposal of the Fiscal Authority, closer to that envisaged by the Executive, amounted to 5,000 million which, discounting the minimum incomes of the autonomous communities to avoid duplication , remained at some 3,000 million, a figure “quite in line” with that calculated by the Government, according to yesterday the Minister of Inclusion, Social Security and Migration, José Luis Escrivá, who until last January chaired AIReF.
“The forecast is quite similar to the oneon the table“added Herrero, who, however, pointed out that when the details of the initiative are known, AIReF will recalculate the impact.
Do not finance with increased debt
Given the impact of the Covid-19 crisis on public accounts, AIReF has advocated resorting to the “escape clause”, the exceptionality clause contemplated in the Budget Stability Law to temporarily suspend the fiscal framework this year, which would allow a structural deficit to be incurredState and Autonomous Communities, together with the elaboration of a Rebalance Plan for the sustainability of the accounts.
In this sense, he pointed out that permanent measures should be included in it with medium-term planning forprovide them with adequate financingthrough income adjustments or expense reductions, and in “no case” with recourse to the increase in public debt, since this should only be given to meet temporary short-term measures and not to finance current spending on a permanent basis .