The International Monetary Fund worsened Spain’s deficit for the next five years and placed it above the eurozone. As such, the international organization estimates a year-end deficit of 4.9% and has revised its estimate upward for 2023 as it puts it at 4.4%, up from April’s forecast of 4.3%. In addition, the IMF forecasts the deficit to be 4.2% and 4.3% in 2024 and 2025, and then remain at 4.3% in the next two years.

These projections are more pessimistic than those made by the fund in April, when it believed that Spain would end 2022 with a deficit of 5.3% of GDP, which would fall to 4.3% next year. It has also been revised upward for the coming years as the international organization estimates the deficit will remain at 3.9% from 2023 to 2027.

Compared to the eurozone, Spain’s deficit is five years higher, according to IMF forecasts. Thus, the organization predicts that the eurozone deficit will end this year at 3.8%, which is more than one percentage point lower than in Spain. In the case of 2023, the eurozone deficit will be, according to the IMF, by 3.3% (by 1.1 percentage points lower than in Spain). In the next four years, the international organization believes that the eurozone deficit will be below 3%: 2.8%; and 2.6% in 2024 and 2025 and 2.5% in 2026 and 2027.

Of the major European economies, Spain will be the second fastest deficit reduction. Only France puts its deficit higher than Spain. A) Yes, The IMF expects France’s deficit to narrow to 5.1% in 2022. and increase to 5.6% next year to then stabilize at 5% until 2027.

As for public debt, the authorities expect it to stand at 113.6% of GDP at the end of 2022, an improvement from April forecasts that saw Spain’s debt exceed 116% of GDP. The IMF expects debt to fall to 112.1% in 2023 and to 110.1% a year later (2024). However, it will remain at 109% throughout the entire IMF forecast horizon, that is, until 2027.

Of the Eurozone economies, Italy has the highest debt-to-GDP ratio. The IMF forecasts show that this year will end at 147.2% of GDP and decline slightly in the coming years, reaching 142.5% of GDP in 2027. Eurozone debt as a whole will close 2022 at 93% of GDP, according to the fund. This percentage will decrease to 91.3% by 2023 and decrease from 90% by 2024. Finally, in 2027 it will amount to 87.8% of GDP,

Fiscal policy for building a sustainable society

Parallel to data The IMF asks in the report what fiscal policy needs to be created to build a sustainable society and it helps people recover from serious adversity. As such, they note that the fiscal policies put in place during the pandemic “have shown that these measures can quickly and effectively protect people and businesses during difficult times.”

Thus, the report highlights the importance of developing a strategy to allow social support to build up reserves in normal times. The IMF believes that these actions will allow governments to respond quickly and flexibly to the needs of society. “It is very important to define a coherent medium-term policy framework for the post-pandemic world,” they note in the paper.