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.”

Posted in Uncategorized