The president of the Independent Authority for Fiscal Responsibility (Airef), Cristina Herrero, called for an improvement in the quality of institutions in Spain on Monday to face an unprecedented situation such as that caused by Covid-19, which it demands to have height of sights.
According to the Airef, Herrero made these statements at the closing of the Public Sector Governance Program organized by Esade.
During her speech, Cristina Herrero reviewed the two-year macroeconomic and fiscal analysis exercise carried out by Airef in the current situation, marked by economic and institutional uncertainty.
In any of the settings of the institution, a contraction of activity in 2020 of unknown magnitude is observed and a recovery that, at the moment, is incomplete.
Thus, the scenarios provided by the Airef lead to a significant increase in expenses, a reduction in income and very high levels of debt and deficit, which represents an intense deterioration of the fiscal balance in 2020, with a limited recovery for 2021.
This is reflected in the debt, which could be between 115 and 120% of GDP in 2020, which will require a strong fiscal consolidation that will also have to be maintained on a long-term horizon.
In this context, Cristina Herrero highlighted the need to identify the existing imbalances that Spain had already accumulated before Covid-19, and to define a medium and long-term exit strategy, in which governance must play a central role.
Lastly, to improve the quality of institutions, in the words of the Airef president, it is key to overcome short-termism and acquire a medium-term approach; base public policies on empirical evidence from the evaluation; and promote transparency and accountability as principles that should guide all actions.
Specifically, Herrero concluded that, although planning is not easy at the moment, uncertainty cannot be an excuse for this medium-term strategy and forecast exercise.
This strategy, according to the president of the Airef, should boost activity in the short term, but also lay the foundations for powerful future, inclusive and sustainable economic growth. In addition, it must have all levels of administration to ensure adequate coordination and co-responsibility and must include a tentative schedule for meeting milestones.