Bank of Spain wants to limit Autonomous Communities’ expenditure
The Governor of the Bank of Spain, Miguel Angel Fernández Ordoñez, warned about the need to limit the capacity of local and autonomous communities’ administrations to increase their public debt. He wants legal limits. He also alerted that a plan B is needed if the economy worsens.
Barcelona (ACN).- The Bank of Spain wants to send out a warning signal and impose a strict control on public debt and expenditure. The focus is now on local and autonomous communities’ public administrations, which have already cut their public expenditure and are participating in the plan to decrease public deficit in order to reduce public debt. In fact, these administrations represent a minor part of the Spanish public debt.
The largest portion of public debt comes from the Spanish Government and its public administration, representing some 75%. The Governor of the Bank of Spain, Miguel Angel Fernández Ordóñez, wants legal initiatives limiting the expenditure, debt and annual deficit of autonomous communities and local administrations .
He alerted that the economic recovery might not be as significant as the Spanish Government forecasted for the 2011 budget. For these reasons, he asked for a strengthening of the Budget Stability Law. According to him, “the majority of the autonomous communities are far from meeting the goals of the austerity plan”.
He also asked the Spanish Government to approve a plan B in case the economy worsens. In the Budget Commission of the Spanish Parliament, he underlined that the “biggest risk” for deviations are autonomous communities and local administrations, as he considers State administration to have a higher control on the expenditure.