Spain | Fiscal Watch 3Q20

The public deficit deterioration will be greater than expected three months ago. In an unprecedented crisis, the sustainability of public debt could be compromised.

Key points

• Key points:
• Budget execution data up to April 2020 already anticipate a greater impact of the pandemic on public accounts than initially expected.
• The containment measures and the state of alert have lasted longer than initially expected, and the increase in expenditure and loss of revenue will be more intense than previously estimated.
• As a result, the deficit forecast for 2020 rises to 14.4% of GDP. In 2021, the cyclical recovery in activity and the temporary nature of many of the measures approved will lead to a rapid reduction in the deficit to 8.4%.
• The unprecedented crisis of COVID-19 will result in a significant increase in public debt, which will reach over 122% of GDP by the end of 2021.
• The recently approved recovery plan, Next Generation EU, will ease the fiscal adjustment pressure and will provide a unique opportunity to address the necessary structural reforms.

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