Mª Dolores Muñoz: "Although this measure only applies for these two years, it is very important for local authorities to be able to use this hard-earned money to address needs in such challenging times as the ones we are experiencing."
Yesterday, the Spanish Ministry of Finance approved the suspension of fiscal rules in 2020 and 2021 as an extraordinary measure to address COVID-19.
Among the specific measures is allowing local authorities to use their surplus. Municipal surpluses, by rule, could only be used to pay debt or, conversely, had to remain in the bank, without being used to address incurred expenses or actions that municipal governments wished to undertake in their localities.
Now, due to the health, social, and economic crisis caused by the coronavirus, and following demands from the FEMP and the various municipal federations in the rest of the autonomous communities, one of them being the FMRM, to allow local councils to use the surplus, the Ministry has decided to repeal the stability and public debt targets and not apply the spending rule in 2020 and 2021.
This decision, according to the press release sent by the Ministry, "is in line with the actions taken at the European level and aims to provide public administrations with all possible tools to combat the pandemic and protect families and businesses."
Concrete measures
According to information released by the Ministry of Finance, the suspension of fiscal rules means that the Economic and Financial Plans (EFPs) submitted by Autonomous Communities and Local Authorities for both fiscal years must be considered exceeded as a result of failure to meet the targets set for 2019.
The measure also stipulates that the requirement to allocate surpluses to debt reduction, while desirable, will be suspended in the coming years.
Likewise, the stability objectives will no longer act as a limit on the allocation of the surplus of the regional governments and local governments to finance Financially Sustainable Investments (FSIs).
Another relevant consequence is that the suspension of fiscal rules will allow local governments to use their cash surpluses to contribute to Spain's economic and social recovery.
For his part, as explained by the Secretary General of the FMRM, Manuel Pato, "in an initial estimate, this measure will require the region to activate resources exceeding 100 million euros, thus contributing to the expenses generated by the pandemic in Murcia's municipalities."
