Download Government approves Stability Programme and National Reform Plan

Council of Ministers
Government approves Stability Programme and National
Reform Plan
Moncloa Palace, Madrid, Friday 26 April 2013
Pool Moncloa / Free access
The two documents contain the government's strategy to continue correcting
imbalances, driving economic recovery and creating jobs. The reforms approved, which
do not increase VAT or Personal Income Tax, will increase growth by more than two
percentage points in the medium term and result in the start of economic recovery in
2014.
The Council of Ministers has approved the Stability Programme 2013-2016 and the National Reform Plan
for submission to the European Commission.
The Vice-President of the Government, Soraya Sáenz de Santamaría, stressed that both plans aim to
"drive the essential structural reforms necessary to iron out the imbalances in the Spanish economy and
exit the recession in the coming years".
Soraya Sáenz de Santamaría announced that the President of the Government, Mariano Rajoy, has
requested an appearance before the Lower House of Parliament as soon as possible to outline the plans.
The Vice-President of the Government commented that the recession in Europe has obliged the majority
of Member States to reorganise their figures. "Since the last National Reform Programme our economy
has been submerged in an unfavourable international environment. However, the government's economic
policy has resulted in certain important elements of our economy being strengthened".
In this respect, she stressed that the major lines of this government's economic policy, set out at the start
of this legislature, will not be modified.
Soraya Sáenz de Santamaría underlined that the great effort made by the Spanish people in 2012 has
enabled the government "to tackle a raft of reforms that will be characterised more by structural reforms
than by other adjustment measures". "The main taxes will not be raised, such as Personal Income Tax or
VAT. Moreover, as far as possible, we will endeavour to reduce them in the near future", she highlighted.
National Reform Programme
The National Reform Programme 2013 represents another drive in the reformist agenda of the last year
and includes measures aimed at improving the effectiveness, flexibility and ability of the Spanish economy
to compete, together with other measures aimed at overcoming the difficulties in obtaining financing in the
financial markets. The Vice-President of the Government summarised the key initiatives.
Cleaning up the public accounts: fiscal consolidation and the Social Security
system
Soraya Sáenz de Santamaría stressed that the government's commitment is to create the Independent
Fiscal Authority as soon as possible, and approve the Transparency, Access to Public Information and
Good Governance Act. It will also implement a plan to combat late payments on the part of the public
administration services and will review taxation in accordance with the European convergence criteria on
environmental taxation and special taxes.
The Vice-President of the Government also highlighted that the government's objective "is to regulate
sustainability to guarantee the future of Spanish pensions", which will include a report issued by the
committee of experts.
Driving the reform of the Public Administration Services
The approval of the Law on Rationalisation and Sustainability of Local Authorities will result in a saving of
almost 8 billion euros in 2014-2015. The report on the reform will be presented prior to 30 June 2013.
Annual employment policy plan and multi-year strategy to activate employment
The employment reform approved last year will continue to be monitored in 2013 through the groups and
committees set up to that end and they will issue an initial report to assess its effects.
Entrepreneurial Support Act and its internationalisation
Fiscal measures will be implemented to support entrepreneurs, such as a special VAT regime, discounts
for reinvesting company profits or for research and development activities. Financing will also be promoted
for entrepreneurs as will the internationalisation of their projects by facilitating visas and authorising
residency permits for foreigners that decide to invest in Spain and contribute to creating jobs.
Law on De-indexing Spanish Economy
This Law will introduce a new reference index that will replace the Consumer Price Index (CPI) in terms of
its periodical updates, among others, of income and expenses, prices, tariffs, taxes and revenue of the
public administration services. The Vice-President of the Government pointed out that this will particularly
affect administrative contracts as far as the current system for updating the CPI results in a loss of
competitiveness for the Spanish economy.
Market Unity Guarantee Act
Its processing through Parliament will be speeded up and it will be complemented by a Regulatory
Streamlining Plan. Some 50,000 regulations have been identified to be redrafted.
Professional Associations and Services Act
In the first half of 2013 the Draft Bill of the Professional Associations and Services Act will be approved,
which will remove obstacles to accessing and exercising activities in relation to a high number of
professional activities.
Corporate Governance Reform
The criteria for transparency, good corporate governance and the governance of public bodies will be
strengthened, particularly in terms of remuneration, also defining the role of general meetings of
shareholders.
Other measures
Soraya Sáenz de Santamaría announced that the regulatory raft of energy reforms will be drafted in this
parliamentary period, together with measures on transport, telecommunications, science, innovation, the
environment and agriculture.
She also stressed that the reform of the financial system will be completed with a new act on savings
banks to make them fully professional. 40 billion euros will be contributed through various formulas to
enable companies and families to once again have access to credit.
Update of Stability Programme 2013-2016
The Minister for Economic Affairs and Competition, Luis de Guindos, highlighted that the forecasts
contained in the macroeconomic chart 2013-1016 are "extremely conservative and prudent" and enhance
the credibility of the path to reducing the public deficit.
The forecasts presented on Friday point to Spain coming out of the recession in 2014, with economic
growth of 0.5%, compared with a fall of 1.3% this year. The minister commented that this is in line "with the
modifications of the forecasts of the main international analysts", including the European Commission and
the International Monetary Fund.
Luis de Guindos explained that this year Spain will record a financing capacity vis-à-vis the rest of the
world of 1.9% of GDP. This shows that the Spanish economy is competitive and that Spanish
products compete better with imports in our country.
The minister also highlighted that the figures show a very significant fall in inflation. "Next month inflation
will stand at less than 1.5%. This is positive from the point of view of competitiveness and a rise in the
purchasing power of Spanish families".
"As a result of correcting all these imbalances, in 2014 the Spanish economy will have recovery with a very
conservative rate of positive growth, of about 0.5% of GDP", added Luis de Guindos.
He also argued that in 2012 we saw a quarter-on-quarter deceleration, while the trend has been upward in
2013. "The first quarter will be the worst and from then on the figures will start to improve from the point of
view of economic growth".
Luis de Guindos reiterated that 2014 will be the year of economic recovery. "We will see the fruit of the
economic policy carried out to date. There will be a significant improvement in investment, exports will
continue to increase their market share and the surplus in the balance of payments will rise to levels
unheard of in Spain. There will also be a significant moderation in the process of the variables of the
labour market that have performed so badly in the first quarter of this year. Inflation will continue its
downward trend".
Fiscal consolidation
The Minister for the Treasury and Public Administration Services, Cristóbal Montoro, pointed out the two
new features of fiscal consolidation contained in the macroeconomic chart forecast by the government for
the years 2013-2016. "The first is the nominal increase in the deficit for 2013, which will rise to 6.3% of the
GDP, and the second is the time extension for the public administration services to drop below 3%.
This will thus allow the Stability Programme to close 2013 with a deficit for the public administration
services as a whole of 6.3% of GDP, 5.5% in 2014, 4.1% in 2015 and 2.7% of GDP in 2016, which will
mean that "Spain is not subject to the procedure to correct its excessive public deficit", the minister stated.
The breakdown of the deficit for 2013 will be 3.7% for the central government, 1.4% for the Social Security
system and 1.2% for the autonomous regions. Local authorities will reach a budgetary equilibrium.
Cristóbal Montoro made it clear that "the government insists on the importance and absolute need to
reduce the public deficit" to exit the economic crisis. It is a question of "this inevitable, unavoidable and
positive path" towards reducing the public deficit being compatible with economic recovery and with the
end of the recession and the elimination of jobs.
As regards taxation, the minister repeated that which was stated by the Vice-President of the Government,
namely that the main taxes will not be increased. However, he added that there is room for revising other
indirect taxes, but this will not include hydrocarbons or those that are particularly prejudicial for the hotel
and catering sector.
Corporate Income Tax may be revised, an environmental tax may be imposed, and the tax on deposits
with financial institutions may be modified, at a very moderate level - with a tax collection figure of around
250-300 million euros - concluded Cristóbal Montoro.
In order to guarantee the path of fiscal consolidation, the measures adopted on a temporary basis in 20122013 will be maintained regarding Corporate Income Tax, Personal Income Tax and Property Tax, which
have resulted in a greater contribution towards the overall effort by large corporations and those receiving
the highest incomes.