José Carlos Sánchez: "postponing the reform of financing is throwing in the towel or not wanting to face the political cost"

 

 

Monedas, moneda, billete. Billetes, euro , euros, capital, efectivo, metálico

The professor of the Faculty of Economics and Business at the University of Murcia (UMU), José Carlos Sánchez de la Vega, who was one of the members of the Committee of Experts appointed to review the regional financing system, has considered that the resignation of the President of the Government, Pedro Sánchez, to undertake the reform of the model before the end of the current legislature means “throwing in the towel” or “not wanting to face the political cost”.

“I do not know how to qualify, but I do not share that decision,” said this economist, who has acknowledged that he does not have all the information regarding the negotiation because his role has been “secondary” since the Committee of Experts finalized its work at the end. July 2017 and has not participated in the meetings of the Permanent Technical Committee of Evaluation of the Fiscal and Financial Policy Council (CPFF), where the representatives of each autonomous community meet.

Speaking to Europa Press, this expert has admitted that he is not aware of the deliberations of that technical committee nor of the situation in which the negotiation was, but presumes that it was “fairly advanced” based on informal conversations with personnel from the Ministry of Finance of the Region.

Therefore, he considered that it was foreseeable that the outgoing finance minister, Cristóbal Montoro, would present a proposal for a financing model in the coming weeks. “If this really is the case, it is a bit strange to say that there is no time to elaborate the reform by 2020,” according to this economist.

In his opinion, this resignation is “either throwing in the towel, or not wanting to face the political cost that could be put on the table a financing system that, for example, some time ago was being demanded shouting by the current Finance Minister, María Jesús Montero, in her duties as counselor in Andalusia. “

EFFECT ON THE REGION OF MURCIA

The decision to postpone the reform, according to Sánchez de la Vega, will mean “perpetuating over time” the shortcomings of the current model until it is modified, maintaining the situation of “underfunding” of the Region of Murcia, which exists even before the current system.

Sánchez de la Vega has stressed that this model is one of the fundamental reasons for the “high level of indebtedness, both absolute and relative, that the Region of Murcia has.” In addition, he explains that there is a “close relationship” between the deficit that “presumably” continue to present the accounts of the regional public administration and the consequent accumulation of debt.

However, he has acknowledged that if the growth in revenue continues as in recent years, “it is expected that the autonomous communities receive more resources.” In his opinion, this can “attenuate” the pressures on the deficit of all communities.

However, this would not respond to a favorable treatment to the Region, but would be attributed to the fact that the good economic situation “contributes to reducing the deficit of all the autonomous communities.”

However, Sanchez de la Vega does not expect this situation to reduce the debt of the Community of Murcia, because “all forecasts point to the deficit will continue to exist.” What is “much more evident” is that the situation of “underfunding” and inequalities between the common regime communities will continue.

This economist has recognized that the Region of Murcia would be failing to receive something more than 200 million euros a year for underfunding, but notes that this amount depends on the year in which it is analyzed or if the comparison is made with respect to the average or the best financed community or, even, with respect to the regional ones.

According to the forecasts, it has advanced that the Region will suffer deficit in 2018 because the income received by the Community through the different channels “will not cover the expenses”. Although this deficit will decrease in relative terms, “there will still be a lag in the accounts”.

PROMPT MEASURES FOR THE COMMUNITIES

This expert does not understand, on the other hand, the announcement of the President of the Government, Pedro Sánchez, on the adoption of specific financing measures for the communities, because the current model only allows the economic dynamics itself to generate a higher VAT collection, IRPF or special taxes, and communities receive more money as a result of the installments. However, he has warned that this does not respond to a “discretionary” decision on the part of the Government, but simply “let the model work”.

Another thing, he explains, is for the central government to grant additional resources through greater investment in the General State Budget (PGE), but warns that it would be something that would occur in 2019 because “for this year I think it is not feasible “

Sanchez de la Vega would not understand “very well” this measure, because the autonomous communities have already said that bilateral agreements “will not be well understood” and that it is necessary “to give a solution as a whole”. In his opinion, solving the existing problems with “hammering in the model”, both on the one hand and on the other, to please the partners and “calm down”, is not “the best solution”.

On a personal level, he has considered that the regional and local elections that are the closest in time “are going to alter little the route plan that seems to have been marked by the current Government”. And it is that, at present, there are communities governed by the PSOE that have demanded until now “with vehemence” the reform of the system and “they have not found favorable answer on the part of the Government”.

If there is a turnaround in the elections and the PP recovers territories, he believes that this road map will not change either because right now there are communities governed by the ‘popular’ ones such as the Region of Murcia that also demand that system change and it does not seem that are going to be taken care of.

Another thing, in his opinion, are the general elections of 2020, in which “it will depend on the color of the government, if it has strong majorities or a need for intense agreements and that requires negotiation by several bands.”

The Representation in Spain of the European Commission, concerned about unemployed youth

 

He has informed the Cortes de Aragón about the 2016 European Semester, the EU’s economic and budgetary policy coordination system.

In a joint session of the Commissions of Economy and Finance, Guzmán has exposed that the economic, financial and debt crisis “has been very strong, has left Europe marked,” especially to the countries of the Euro Zone, compared to what Member States have reacted by developing the banking union and reinforcing the European Semester.

He highlighted the “blow” suffered by the labor market and the fall in investment, although “we are growing again” and, in fact, the Spanish economy has done it almost twice as much as the other countries in the Euro Zone. , leaving behind the “critical situation” of 2012.

Guzmán has defended the social character of the EU, observing that “social Europe is one of the main projects and the raison d’être of the EU”, adding that “it is a dream that inspires us on a daily basis”.

In December 2016 and January 2017, the Commission, the Parliament and the European Council will agree on a medium-term strategy to “launch the policy umbrella” next year and in February the Country Report of each Member State will be presented, with an analysis in depth of economic imbalances.

The economic adviser has relied on Spain to take effective actions to reduce the deficit and not freeze the structural funds, highlighting the “common interest” to avoid it. The European Commission takes into account that the Government is in place and expects that the budget plan will be presented afterwards, updated according to “the objectives set”.

He commented that the regional funding has a “hot” interest that the European Commission follows closely and that it talks about it with the Ministry of Finance, AIREF and the Bank of Spain. It has called on all administrations to improve the quality of public spending and fight against corruption, which “has a cost

 

EUROPEAN SEMESTER

EUROPEAN SEMESTER

The European Semester now covers more policies, specifically financial, fiscal and macroeconomic imbalances, always with the objective of Member States “working side by side” within the framework of a “vision of Europe as a whole”. Now, the supervision of the economy of each country has been improved, new measures of stability and “structural effort” have been implemented in the medium term, and specific recommendations have been articulated for each country, with mechanisms to correct the excessive deficit and excessive imbalances. .

“There is a virtuous triangle”, deepen fiscal responsibility and “structural reforms 2.0”, relaunch investment and improve labor markets, products and services, said Guzman, noting that it is not only to optimize competitiveness since wages, but also with training and technology.

JUNCKER PLAN

JUNCKER PLAN

The economic counselor has defended the Juncker Plan for the encouragement of private investment in the EU, prepared after verifying that it fell “brutally”, rising since 2014 always below historical levels.

He explained this drop in investment due to the crisis of investor confidence due to “bad expectations”, and also due to the high levels of indebtedness in both the public and private sectors, as well as the limitations of access to credit.

The Juncker Plan contemplates measures to make strategic investments, with a ‘window’ of 25 percent for SMEs, to which is added a portal of European investment projects, “something that many foreign investors asked us”, a European center for investment advice, which also informs about the instruments of the European Investment Bank.

This plan includes the improvement of the investment framework, so that the legislation is “predictable and makes sense” both in each country and in the EU, in order to deepen the single market by promoting a “true union” of the energy, digital, services and capital.

It also aims to “leverage the public funds that we have, which are few, to generate the maximum amount of private investment,” said Guzmán, who has relied on generating investments worth 127,000 million euros.

In Spain, more than 10 operations of a total of 115 have been signed throughout the EU and another 209 financing agreements for 290,000 SMEs and companies with fewer than 3,000 employees.

In terms of fiscal responsibility, the economic advisor continued, the Stability and Growth Pact continues to be applied, which allows implementing measures to reduce the excessive deficit and public debt.

Spain is among the countries with the highest public deficit, along with Croatia, France and Portugal. Thus, the European Commission opened the procedure for excessive deficit in 2009, making recommendations in 2012, 2013 and 2016. For this year the target set for Spain is 4.6 percent and in 2017 of 3.1 percent, down to 2.2 in 2018.

OBLIGATIONS

OBLIGATIONS

The deputy of the PP, Ricardo Oliván, recalled the contribution of the EU to the development of Spain and the improvement of the quality of life, emphasizing that “we forget that being part of a club entails rights and obligations”, criticizing who reject the Juncker Plan and then “dismiss investments” for cities such as Madrid, Barcelona and Zaragoza.

The socialist parliamentarian, Leticia Soria, has opined that “one of the main priorities must be to reduce economic, social and territorial inequalities”, hence the importance of cohesion policy. “We believe that a social Europe is possible,” he stressed.

The deputy of Podemos, Hector Vicente, has stated that “from the Europe of solidarity and rights has been passed to the austerity and cuts”, so that “today’s EU moves away from the European dream that in its day we build. ” Román Sierra also intervened on behalf of the purple formation, stating that “European policies have brought great suffering to the people we represent in this chamber”, alluding to the “scourge” of social inequality and the “loss of rights” .

From the PAR, Elena Allué has warned that the breaches of Spain on the recommendations of the EU “in the end will affect the autonomy” and has lamented the “lack of budgetary resources”, which has produced a deficit in the cost of the social services that were transferred.

On behalf of C’s, Javier Martínez has warned that “expansive policies, when they are not done well end up being explosive,” which is “what happened in Spain.” He has stated that “the duties that were not done when the situation was good now we have to make them worse off”.

Gregorio Briz has made clear that from CHA “we do not share from the first to the last page” of the stability policies, throwing in face to the European Commission that “they have deepened the crisis”. The fiscal consolidation is “impossible”, has considered.

The deputy of IU, Patricia Luquin has criticized the “publicity” of the Juncker Plan, lamenting that the EU “has only been concerned with rescuing companies or banks”, transferring private debt to the public sector, and that it has abandoned “its social character” .