The overall public deficit fell to 48.19 billion euros at the close of 2016, excluding financial aid, which represents a reduction of almost 12% on the previous year. In GDP terms, this figure equates to 4.33% of GDP. With this figure, Spain has met the Recommendation of the European Council, which called for the public deficit to be reduced to 4.6% in 2016.
Including financial aid, which this year amounted to 2.39 billion euros (0.21% of GDP), the deficit has fallen by 0.59 percentage points to 4.54% of GDP in 2016.
Over the last five years, Spain has managed to reduce the public deficit by more than half, from 9.3% in 2011 to 4.3% in 2016.
The primary deficit of the public authorities - excluding servicing debt - fell to 1.73% of GDP at the end of 2016.
In 2016, with the aim of guaranteeing compliance with the fiscal consolidation commitments taken on with the European Union, the government approved a non-availability agreement and brought forward the close of the Central Government's accounts, measures which together resulted in a saving of 4.68 billion euros in 2016.
Other items that fell over the year, also helping achieve the budget stability target of the public authorities, were unemployment benefits and spending to service debt, which fell in 2016 by 9.4% and 5.6% respectively.
Central Government
The Central Government reduced its public deficit to 28.02 billion euros at the close of 2016, after excluding financial aid. The deficit-GDP ratio stands at 2.52% of GDP compared with 2.59% of GDP in 2015.
The State deficit amounted to 29.31 billion euros, a figure that represents a fall of 0.2% on 2015 and represents 2.63% of GDP.
The Central Government bodies posted a surplus of 1.29 billion euros (0.12% of GDP), compared with a surplus of 2.57 billion at the end of 2015 (0.24% of GDP).
The positive performance of the State deficit is due to the non-financial expense falling by 1.3% while revenue only fell by 0.9%.
There was a noteworthy fall of 5.5% in non-tax resources, from 28.54 billion euros in 2015 to 26.98 billion in 2016, mainly due to the fall in transfers received by the State from the regional governments and local authorities, which amounted to lower revenue from transfers to the State of 2.43 billion euros.
The reduction in spending was posted in almost all headings; however, there was a particularly noteworthy fall in transfers to the State Public Employment Service, which dropped from 10 billion euros in 2015 to 3.88 billion in 2016, due to a lower allocation in the State Budget of capital transfers from Central Government bodies of 51%, as well as a fall of 4.8% in accrued interest as a result of interest rate changes.
Social Security Funds
Social Security Funds closed the year with a deficit of 1.62% of GDP.
In 2016, the deficit increased by 4.95 billion euros, due to a fall of 6.26 billion euros in transfers received from the State, almost entirely by the State Public Employment Service, which was partially offset by the positive performance of unemployment benefits, which have fallen by 9.4% and the 3.4% rise in 2016 in National Insurance contributions.
By body, the Social Security system posted a deficit of 20.28 billion euros, which stands at 1.82% of GDP; the State Public Employment Service posted a positive balance of 2.29 billion euros despite the significant decline in 2016 of transfers received from the State. The Wage Guarantee Fund (Spanish acronym: FOGASA) improved its negative balance on the figure for the previous year, from a deficit of 177 million euros in 2015 to a deficit of 107 million in 2016.
Regional governments
The regional governments have reduced their deficit by more than half, from a negative balance of 18.69 billion euros to a deficit of 9.16 billion euros in 2016. In GDP terms, the deficit of this sub-sector represents 0.82%, compared with 1.74% at the end of 2015, a reduction of 0.92 percentage points.
The fiscal result of this sub-sector is influenced by the increase in regional resources derived from the application of the financing system, which increased by more than 8.2 billion euros on 2015. In terms of the regional governments, 11 met their deficit target.
The non-financial resources of this sub-sector increased by 4%, with a volume of 158.34 billion euros, 14.2% of GDP, while non-financial expenditure, at 167.49 billion euros, fell by 2% and equates to 15% of GDP, a lower ratio than in 2015 by 0.85 points.
Local authorities
Local authorities posted a surplus for the fifth consecutive year, amounting to 7.08 billion euros in 2016, 39% up on the previous year. In GDP terms, the surplus amounts to 0.64%, a 0.17 point improvement in GDP terms on the figure posted in 2015. Revenue from this sub-sector has grown by 1.5% while expenditure has fallen by 1.5%, which explains the positive performance of this sub-sector in 2016.
For further information on the public authorities budget performance, click on the following link.
Ministerio de Hacienda y Función Pública