Publication of State budget execution data
The State reduced its deficit by 1.2 pp of GDP in the third quarter
News - 2017.10.31
On Tuesday the Ministry of Finance and Public Function published on its website the State deficit figures for the month of September, together with the consolidated deficit of the Central Government, Autonomous Regions and Social Security corresponding to August, stated in national accounting terms.
State deficit (September)
In the first three quarters of the year the State posted a deficit of 17.03 billion euros, equivalent to 1.46% of GDP. This deficit rate is 1.17 percentage points lower than the previous year's figure, when the deficit stood at 2.63% of GDP.
In the performance of the State deficit we should take into account the settlement of the regional and local government financing system for 2015 carried out in July, which amounted to 9.26 billion euros, 602 million more than the previous year's settlement. Excluding the settlement effect in both years, the State deficit to September would fall by 39.5% year-on-year to 0.67% of GDP, compared to 1.16% the previous year.
Excluding interest expense, the State presented a primary surplus of 0.22% of GDP, to September, compared to the primary State deficit of 0.76% recorded in the same period 2016.
Non-financial state revenue
In the period January-September non-financial state revenue amounted to 133.01 billion, 5% more than in 2016.
The revenues from taxes and social security contributions amounted to 121.69 billion euros, of which 73 billion corresponded to taxes on production and imports, among which is VAT, whose revenue grew by 5.5% year-on-year. Meanwhile, current taxes on income and property amounted to 43.11 billion, up by 10.3 %. Corporate income tax forms part of this tax group, which was up by 23.2% due, as explained in previous reports, to the increase in revenues from the first fractionated payment of 2017.
With regard to other revenues, income from property fell by 11.3%, mainly due to lower dividends from the Bank of Spain, and income from social contributions fell by 2.7%. Conversely, interest accrued grew by 0.8% to September, mainly due to interest from loans from autonomous region and local authority funds.
Non-financial State expenditure
Non-financial state expenditure fell by 3.9% to the third quarter, a total of 150.03 billion, continuing the trend seen in previous months.
The general drop in nearly all expense items stood out, with a 10.7% reduction in intermediate consumption, a 6.6% drop in interest, a 4.1% decline in remuneration of salaried employees, and a 13.3% reduction in the EU's own resources. Current transfers between public administration services, the item accounting for the largest volume, are also down at 2.7%, mainly due to the lower volume of transfers made to the State Public Employment Service to finance unemployment benefit, down by 2.42 billion. Gross fixed capital formation decreased by 10.1% year-on-year, and capital transfers and aid to investment were slightly lower.
Among the expense items that grew were social benefits other than social transfers in kind which increased by 2.1% due to the 3.9% growth in civil service pensions.
Combined deficit of the Central Government, Autonomous Regions and Social Security (August)
In the period January-August the consolidated deficit of the public administration services, excluding local authorities, was 27.27 billion. This figure excludes the net balance of aid to financial institutions which at month-end August amounted to 372 million euros, compared to the 2.08 billion the previous year. In GDP terms the deficit was equivalent to 2.34% in August, 27.6% lower than the figure recorded for the same period 2016 (3.37%).
In July the definitive settlement of the regional government financing system corresponding to 2015 was effected. The final figure was 9.26 billion euros, 602 million more than the settlement paid the previous year. The budget execution figures published on Tuesday are affected by this settlement of the financing system; they improve the balance of the autonomous regions but reduce the funds available to the State in the same amount.
Central Government
The Central Government posted a deficit of 21.31 billion at month-end August, equivalent to 1.83% of GDP, excluding financial aid. The balance of the Central Government includes the State balance together with the balance of Central Government agencies:
- The State deficit to August was 21.49 billion, 1.84% of GDP.
- At month-end August the Central Government agencies recorded a deficit of 0.02% of GDP.
Autonomous Regions
Autonomous regions have improved from an 852 million deficit in 2016 to a 1.37 billion surplus in 2017. In GDP terms, the surplus of the autonomous regions was 0.12% in August compared to a deficit of 0.08% for the same period 2016. This change was due, among other reasons, to the definitive settlement for 2015, with a balance in favour of the autonomous regions of 8.65 billion, while the definitive settlement for 2014 was also in their favour but only in the amount of 7.67 billion. In total, eleven autonomous regions posted a surplus in August.
Social Security funds
Social Security funds recorded a 7.33 billion deficit to August, equivalent to 0.63% of GDP. In this subsector we would highlight the performance of revenues from social contributions, which recorded a 5.5% growth to August, a much higher rate than was recorded in the same period of 2016, when growth of social contributions was 3.3%.
The deficit of the subsector increased slightly by 0.04 points of GDP in comparison with the previous year, as a result of the lower surplus posted by the State Public Employment Service (0.08% of GDP this year compared to 0.19% of GDP recorded the same month of the previous year). As in previous years, the drop in surplus was solely due to the lower volume of transfers received from the State to finance unemployment benefits (by 2.10 billion), as a consequence of the favourable performance of the job market.
Meanwhile, the Social Security System posted a deficit of 0.71% of GDP, compared to 0.77% recorded in the same period 2016, an improvement of 0.06 percentage points. Finally, the Wage Guarantee Fund (Spanish acronym, FOGASA) improved its result, moving from a deficit of 120 million euros in August 2016 to a surplus of 4 million in the same period 2017.
Non official translation