The Catalan Government will have its deficit limited to 0.14% by 2018

Barcelona (ACN).- The Catalan Law of Budget Stability was approved on Thursday by the Catalan Parliament. The new law obliges the Catalan Government to meet a 0.14% deficit target (of Catalonia’s GDP) by 2018, two years earlier than the deadline set in the Spanish equivalent. Beyond 2018, the Catalan Government has to tend towards a 0% deficit, which it will have to meet by 2020. In addition, the budget surplus will be used to reduce debt. The new law was approved with the votes of the Centre-Right Catalan Nationalist Coalition (CiU), which runs the Catalan Government, and with those of the Conservative People’s Party (PP), which runs the Spanish Executive. The rest of the opposition, except one independent MP, have voted against the law. There has been a total opposite sentiment between Left-Wing and Conservative parties regarding the law. Right-Wing parties have voted for it, while Left-Wing parties, in the opposition, have voted against it, mainly because of the 0% deficit principle, which they define as “a dogma” that will “restrict” the Catalan Government’s room of manoeuvre.

As announced at the end of September by the Catalan Government, Catalonia has set its own Budget Stability Law. Seven months ago, the law proposal set a deficit limitation of 0.14% of Catalonia’s GDP by 2018. On Thursday at the Catalan Parliament the governing CiU has been backed by the PP to pass the law. Therefore, by 2018, the Catalan Government will only be allowed to have a 0.14% deficit, being stricter than the law approved at Spanish level. Furthermore, by 2020, the deficit will have to be null, equivalent to 0%.

CiU’s MP Maria Senserrich stated that eliminating the public deficit in the fastest possible way is a “necessary” objective. PP MP, José Antonio Coto, emphasised the importance to control the public deficit and criticised the previous governments that saw how the deficit was growing without stopping it. CiU and the PP have also been backed by one independent MP, Joan Laporta, from the so-called Mixed Group, which combines MPs from different small parties, too small to form their own parliamentary group.

The rest of the opposition, including the rest of the Mixed Group, has voted against the law. They are all the Left-Wing parties. The economics Spokesperson for the main opposition party, the Catalan Socialist Party (PSC), Rocío Martínez-Sampere, has been very critical with the new law, in particular for its lack of flexibility. According to Martínez-Sampere, the Budget Stability Principle is a fair one, and it is already included in Catalonia’s Statute of Autonomy (Catalonia’s main law), which was approved in 2006. However, according to the PSC, the new rule “is a law that brings an insensible dogmatism regarding the deficit. A fervour for budget cuts. And it represents the country’s economic and social asphyxia”.

The concept of “zero deficit” has been criticised by the Left-Wing parties. Besides the PSC, the Catalan Green Socialist and Communist Coalition (ICV-EUiA) has said that the new law transforms “a false principle in an immutable truth: that of facing a situation of deficit, the best thing to do is reduce public spending”. The Spokesperson for the ICV-EUiA, Joan Boada, said that both the Catalan and Spanish Governments have implemented this recipe and have created “more recession, more budget cuts, more suffering and more unemployment”.

The MP of the Left-Wing Catalan Independence Party (ERC), Sergi de los Rios, said that Catalonia should meet the budget stability objective, “but not by following the thesis of neoliberal dogmatism”. De los Rios reminded that stability might be reached by budget cuts but also through expansive policies, increasing the GDP. ERC had presented an amendment that was later refused, by which the budget surplus should not be entirely used to reduce the public debt, but to allocate half of this surplus to social policies. Another rejected amendment was demanding that the Catalan Government in the case of eliminating taxes, should be obliged to look for an alternative measure to compensate the revenue loss.

Finally, the rest of the Mixed Group MPs have also voted against the law. The Spokesperson of the populist Anti Catalan Nationalism Party (C’s), Jordi Cañas, reflected that it might be dangerous to make the Catalan law tougher than its Spanish equivalent. Meanwhile, the MP of the populist and radical Catalan Independence Party (SI), Uriel Bertran, criticised the situation as the Catalan Government’s revenue will still depend on the Spanish Government’s “arbitrariness”.