Spain"s deficit stands at 0.04% of GDP in the first quarter and is 33.3% lower than in the same period of the previous year (2024)

The Monitoring Committee of the Ministry of Finance has today published a series of data on its website on the budgetary execution of Public Administrations in 2024.

The deficit at the end of March stood at 0.04% of GDP, compared to 0.07% in the same period of 2023. Thus, the deficit in the first quarter amounted to 667 million euros, a reduction of 33.3% compared to the 1 billion euros recorded in the first quarter of last year. Developments up to March show that the government deficit continues the downward path initiated in 2021 and maintained in 2022 and 2023 as a result of the improvement in economic activity and employment.

Likewise, the Ministry of Finance has also published the consolidated deficit data of the Central Administration, Regional Governments and Social Security today on its website for the month of February in terms of national accounting, standing at 0.78% of GDP.

Deficit (March)

In the first quarter of the year, a deficit equivalent to 0.04% of GDP was recorded, down from 0.07% in the same period last year. This brings the deficit to 667 million euros, a reduction of 33.3% compared to the 1 billion euros recorded in the first quarter of 2023.

This development is due to a 1.3% increase in revenues to 61.904 billion euros, while spending increased 0.7% to 62.571 billion euros.

Non-financial resources of the state

Non-financial resources amounted to 61.904 billion euros, 1.3% more than in the same period of 2023. Taxes amounted to 53.896 billion, just over 87% of total resources, and grew 7% compared to March 2023.

Taxes on production and imports increased 2.7%, of which 27.585 billion euros was VAT revenue, 2.9% higher than in 2023. VAT revenue is up for a number of reasons, including temporary rate reductions that were implemented as a result of price pressures on various essential goods in production and consumption, and which from January 2024 have begin to gradually increase. On the other hand, the tax on non-reusable plastic packaging stood at 105 million euros, while in 2023, the year in which it came into force, revenue stood at 83 million euros.

Current taxes on income and wealth amounted to 19.010 billion euros, 15.8% higher than in the first three months of 2023. Of this amount, 843 million euros corresponds to the Temporary Levy on Credit Institutions and Financial Credit Establishments. Personal income tax reached 16.161 billion euros and non-resident income tax revenues increased 20% to 931 million euros.

In addition, taxes on capital amounted to 46 million euros and income from social security contributions to 1,436 million euros.

Property income amounted to 1.727 billion euros, of which 1,671 billion euros related to interest, up 64.3% on the previous year, and 56 million euros to dividends and other income.

Revenues from the sale of goods and services stood at 465 million euros. Finally, the rest of the resources stood at 931 million, including investment aid and current international cooperation, among others.

Non-financial employments of the state

At the end of the first quarter, the State's non-financial assets stood at 62.571 billion euros, 0.7% higher than in the first three months of 2023.

The largest item is transfers between public administrations, which account for around 60% of total non-financial use. Specifically, in the first two months of the year they amounted to 37.842 billion euros, 0.6% more than the previous year.

On the one hand, the regional administration has received 22.189 billion euros. Of the total transfers, 20.59 billion euros corresponds to the financing system, of which 19.973 billion euros is payments on account and the rest corresponds to the advance of resources of the financing system.

In turn, the Social Security Funds received 7.56 billion euros, 53.6% more than in 2023, of which 7.537 billion euros went to the Social Security System.

On the other hand, Local Government has received 6.204 billion euros. Of the total transfers, 5.425 billion euros corresponds to their share of state revenues, 0.2% more than in the previous year.

Salaries of employees grew 3.7% to 4.841 billion euros. In March, public employees received the arrears, from 1 January 2023 to the end of February 2024, corresponding to the 0.5% salary increase established in the LPGE 2023. This increase consolidates a wage increase for 2023 of 3.5%, which until now was 3%.

Thus, wage remuneration is up by 4.5% compared to March 2023. Intermediate consumption amounted to 2.074 billion euros, 25.6% more than in the same period of the previous year, due to election expenses.

Accrued interest increased 20% to 6.489 billion euros, while social benefits other than social transfers rose 6.5%, mainly due to higher outlays on retirement pensions, which were up 6.8% to 4.687 billion euros, among other reasons, because of the 3.8% revaluation of contributory pensions in 2024.

Spending on grants reached 985 million euros. Production subsidies fall to 123 million in March 2024.

For its part, current international cooperation stands at 280 million euros, of which 43 million euros corresponds to the contribution to the European Development Fund, while the contribution to the EU from own resources based on VAT and GNI stands at 2.378 billion euros.

Finally, gross fixed capital formation stood at 1.662 billion euros; an increase of 10.7%, while investment aid and other capital transfers together amounted to 215 million euros.

Deficit of Central Government, Regional Governments and Social Security (February)

In February 2024, the combined deficit of Central Government, Social Security Funds and the Regional Governments stood at 12.031 billion euros, equivalent to 0.78% of GDP, including financial assistance. Excluding the latter, the deficit would reach 12.035 billion euros.

Central Government

The Central Government deficit stood at 8.445 billion euros at the end of February 2024, which equates to 0.55% of GDP. Excluding financial aid, this result is 3.2% higher than in the 2023 period at 8.185 billion euros.

• The State deficit in February, in terms of GDP, is equivalent to 0.6%, or 9.309 billion euros.
• Central Government Agencies recorded a deficit of 864 million euros in February 2024, 27.3% lower than the deficit in 2023.

Regional Governments

The Regional Administration recorded a deficit at the end of February 2024 of 3.646 billion euros, equivalent to 0.24% of GDP. This result is due to a 6.9% increase in spending, while revenues are virtually unchanged compared to February 2023.

Taxes grew 2.6% to 13.412 billion euros. Of these, taxes on production and imports amounted to 2.936 billion euros.

Income and wealth tax revenues increased 3.4% to a total of 10.053 billion euros, of which 9.538 billion euros corresponded to payments on account made by the State, an increase of 3%. Revenues from capital taxes amounted to 423 million euros.

Transfers between public administrations amounted to 17.160 billion euros. Of the above amount, transfers received from the State through the financing system fell 1%, from 13.416 billion euros at the end of February 2023 to 13.315 billion euros in the same month of 2024.

At the same time, revenues from other sources amounted to 2.434 billion euros, 5.7% lower than in February 2023.

On the side of spending, salaries of employees grew 6.5% to 15.734 billion euros. Intermediate consumption rose 1.7% to 6.466 billion euros. Subsidies amounted to 600 million euros, an increase of 15.4% compared to the end of February 2023, mainly due to the increase in product subsidies. Meanwhile, interest income increased 29.3% to 1.076 billion euros.

Social transfers in kind rose 7.3% (367 million euros more) to 5.422 billion euros. This heading includes spending on health care agreements with an increase of 14.9% (133 million euros more) to 1.025 billion euros, on pharmacy with an increase of 5.1% (109 million euros more) to 2.267 billion euros and educational agreements with an increase of 4.8% (58 million euros more) to 1.271 billion euros.

Social benefits other than transfers in kind increased to 729 million euros. Finally, investment amounted to 3.089 billion euros, 12.6% higher than in the previous year.

Social Security Funds

The Social Security Funds at the end of February 2024 recorded a surplus of 56 million euros, while in the same period of 2023 they had a deficit of 782 million euros.

Revenue growth of 10.1% outpaced growth in spending of 7.4% by 2.7 percentage points.

It should be remembered that in January 2023 the Intergenerational Equity Mechanism (MEI) began to be applied, which consists of an additional final contribution applicable to all schemes and in all cases in which contributions are made for the contingency of retirement, which will not be taken into account for the purposes of benefits and which will be allocated to the Social Security Reserve Fund. In 2024, this additional contribution is 0.7 percentage points, while in 2023 it was 0.6 percentage points. Also noteworthy is the revaluation of contributory pensions by 3.8% for the year 2024. Another new feature in 2024 is the obligation to pay contributions for all university and vocational training students who undertake paid or unpaid internships.

In the second month of 2024, the Social Security System recorded a deficit of 479 million euros, or 0.03% of GDP, compared to a deficit of 0.07% in February 2023. Resources amounted to 31.221 billion euros, 10.3% higher than in 2023. The 8% increase in social security contributions stands out. The number of people affiliated to the system on a monthly average across all schemes increased 2.7% compared to February 2023. Spending amounted to 31.7 billion euros, largely corresponding to spending on pensions, which grew 6.5% to 26.143 billion euros.

As in previous years, the Public State Employment Service (SEPE) obtained a surplus of 487 million euros, 81.7% higher than in 2023 when it was 268 million euros.

FOGASA showed a surplus of 48 million euros, compared to a surplus of 31 million euros in the same period of 2023.

Non official translation