The International Monetary Fund (IMF) has asked the Government of Spain to “ensure the sustainability of the pension system”, after the Social Security Ministry approved in 2021 a first part of the reform and when it is working on a second, and
That reduces bulky levels of public debt.
This has been warned by the institution that directs Kristalina Gueorgieva in the report on the Spanish economy published on Wednesday after its research framed in Article IV, which makes the Fund in each country on a periodic basis.
“Directors have emphasized that fiscal policy in Spain should continue to support the economy in the short term and be increasingly focused on helping vulnerable ones, as recovery is based, public debt should be reduced to build a
Fiscal space that allows responding to future shocks, “has requested the IMF.
For this reason, they ask that they soon formulate “a credible short-term fiscal consolidation plan that helps build the necessary social consensus and support investor confidence. The directors also highlighted the importance of ensuring the sustainability of the pension system”.
The Government must have approved in this year a second leg of pension reform, in which it will address the modification of the autonomous system, the contributions of the fellows and the modification of the computing period to calculate the pension.
It is the condition to continue receiving European Next Generation funds.
In terms of growth, the Fund estimates that the Spanish economy will not recover the levels of gross domestic product (GDP) prior to the pandemic until the end of this year.
This assumes that staying far behind with respect to the whole of the eurozone, which has already reached that point at the end of last year.
Specifically, the expected figure of rebound is maintained at 5.8% for this year, which will continue a clear deceleration: EN 2023 the expected growth is 3.8% and 2.3% in 2024.
The creation of jobs will also stagnate.
This year, provides for the IMF, the unemployment rate will be 14%, while in 2023 the figure will go back to 13.5%.
And in the whole period studied, it reaches up to 2027, it will barely fall to 13%.
The organism document that directs Gueorguieva also shows its concern about the huge debt that accumulates the Spanish economy.
In fact, he asks the government to “reduce” the liabilities to have a greater room for maneuver to future crises.
This is, just what Spain has not had before the crisis derived from Coronavirus.
According to the estimates of it, the debt will be maintained above 115% of GDP throughout the analyzed period.
The IMF has remembered that inflation reached the record of the last 30 years in December, driven by the base effect – from the price drops of 2020- and by the continuous increase in gas prices, and foresees it to continue upwards in
2022.
“Inflation is likely to follow elevated at the beginning of 2022 due to the high energy prices and the disruptions of the supply chain, but should be moderated in the second half of the year as these factors dissipate,” point.
Specifically, they expect the IPC to close the year at 0.5%, in the month of December, but the bulky rates of the first months will surround the average inflation at 3.5%, according to their forecasts, above the 3
, 1% registered in 2021.
In the rest of the period, up to 2027, the price increases will be moderated and inflation will stabilize around 1.7%.
Regarding labor reform, the IMF has concluded its approval: “The Directors of the IMF welcome approved labor reform aimed at correcting the deficiencies that both have been existed and balanced by giving more protection to workers and preserving flexibility for
the companies”.
They believe, however, that employment policies seek to be improving employees and asks to follow the impact of these reforms in public finances will be followed closely.
