The hidden autonomic deficit exceeded 5.15 billion to that observed in 2016

The accounts of the public administrations, although clearly improved thanks to the economic recovery, continue to present elements that call the concern, especially in the case of the autonomous communities. One of the most important is what could be called the hidden deficit, the result of "correcting the distortions generated in the time profiles of the regional income and expenditure series" and then verifying the total budget balance.

This is what the economists of Fedea have done under the leadership of Ángel de la Fuente, who is also an analyst at the CSIC and participated in the group of experts that the Government created to elaborate a proposal on the new system of autonomic financing. Their findings show that this hole, although reduced by 8.5% last year compared to the figure of 2015 - the official red numbers fell, in turn, 51% -, was higher by 5.15 billion euros to the deficit official declared by the autonomy and later made official by the Ministry of Finance.

The difference between one and the other shot up in 2016 to 56.2%, a margin not seen even in the worst years of the crisis. In fact, the previous year, the underlying budget balance was 3.043 billion lower than the one observed later for that year in the figures recorded by the Government and sent to the European Commission.

In order to reach that liability that would be hidden under different "atypical" factors, the director of Fedea has focused its adjustments on the way in which the unpaid bills of the autonomies have been counted. It has also considered the deferred negative balances of the settlements of the territorial financing system in the 2008-2009 biennium and also the retentions practiced to the communities to pay these outstanding amounts.

After completing these calculations, the previously unknown accounting imbalance reached 14,305 million in 2016, compared to the observed budget deficit of 9,155 million. The good thing is that the underlying negative balance was 4.2 billion less than two years ago, the bad thing, that "its pattern of gradual reduction was much smoother" that last exercise, warns De la Fuente.

At the expense of the government

That is why, in its report, it points out that the current budgetary situation of the communities is "less comfortable than it might seem at first glance", even the pattern observed in the last two years "is somewhat misleading". And the approach to the deficit target between 2015 and 2016 was "fundamentally" due to a "sharp reduction" in the interest on its debt by "discretionary actions" of the Government, which "could not be maintained in the future". For example, the gradual reductions in these returns that have been accepted by the Executive, or the implementation of both the Regional Fund for Liquidity (FLA) and payment of suppliers.

This reduction in the budget imbalance has also been due to "an additional drop in investment from already very low levels" which, he warned, "should begin to reverse as soon as possible". The balance of capital operations in the autonomies fell by 18.2% in 2016, with 2.578 million less, while interest payments increased by 5.7% (431 million). On the other hand, other current expenses grew 3.3%, 4,296 million more.

The evolution of investment, insists the director of Fedea, is "certainly worrisome." Thus, from 2009 to 2016 its real per capita volume fell to less than half, both in the country as a whole and in 13 of the 17 autonomous regions, and more markedly in Andalusia, Asturias, Castilla-La Mancha and Catalonia.

"If this situation is not corrected in a reasonable time, this situation will end up compromising the quality of public services" that can be provided by the communities, he warns in his report. The problem, he adds, is that in the final part of the time period analyzed "in most cases there is no recovery" of gross investment.

"Parking invoices"

But there are other troubling conclusions. Thus De la Fuente has detected that the so-called 'extrabudgetary' account 413 of the general government accounting system has been used to 'park a significant volume of invoices for long periods of time'. This, he warns, can "offer a distorted picture" of the evolution of expenditure.

In addition, the autonomies have not yet finished repaying the 23,148 million favorable to the State for the liquidations of the financing system of 2008 and 2009. In fact, the Government has been extending the total term of payment until twenty years of delay. Another element, he warns, could "distort" the pattern of income and deficit.

In this context, he concludes, "it would be necessary to make an effort to contain current spending". But, he admits, is that "surely will not be easy in the current political circumstances."