He has said it in the past and has already repeated it in the current pre-campaign. The president of the PP, Alberto Núñez Feijóo, has committed, if he comes to power, to launch "an audit of Sanchismo" and "to find out what Mr. Sánchez has spent the money on during the eight years he has led the country and why public services are worse than ever." This leads to the laudable objective of lifting the rug and verifying whether the General Intervention of the State has done its job well, under the orders these years of the Ministers of Finance, María Jesús Montero and Arcadi España.
Feijóo suspects that there may be a hidden deficit after four years of juggling without budgets in which, in addition, the National Institute of Statistics has made upward revisions of the GDP in recent years that have not been understood by the Bank of Spain or other bodies. The problem is that, only with the data officially declared by the Government, the Independent Authority for Fiscal Responsibility and the Bank of Spain assume that they will lead to a non-compliance with the European spending rule and bring closer the obligation to adopt adjustment measures sooner or later.
If, furthermore, these data are actually worse and are revealed by a possible new Government, Spain may enter into a focus of attention in the markets that is currently focused, with reason, on France. This has not meant that Spain has been immune to the current tension in the debt markets, which is why the Treasury has to compensate with more than 4% interest on the 10-year bond, when 3% was enough at the beginning of the year. Of course, it does not reach the 5% that France has already hovered around.
"Feijóo must pull up the rug, but carefully, because the markets are going to be very attentive in the coming months to the accounts of the euro countries," says one of the economists who regularly speaks with the Galician. Just with what is happening in other countries, the horizon becomes complicated. The general director of Economy of the Bank of Spain, David López Salido, points out in his report this month that "the deterioration of the outlook for public finances in several advanced economies could raise the yields on their sovereign debt and tighten financing conditions in Spain." And AIReF highlights in its latest Debt Observatory that, in a scenario of increased tension, interest expenses in 2030 would be between 67,200 and 73,200 million euros, compared to 58,300 million in the base scenario, "with an annual extra cost of between 9,000 and 15,000 million euros." That would imply withdrawing resources from other items, such as social or military spending, to pay debt service.
Are there precedents for hidden deficits that emerge after a change of Government? Too many, and they affect both major parties. In 1996, the then new Government of José María Aznar revealed what they called "bills in the drawers" and the public deficit in 1995 closed at 6.79%, compared to the 5.87% declared by Felipe González. The then European commissioner Yves Thibault de Silguy criticized the concealment, but stressed that this was not going to mean more flexibility for Spain in meeting the conditions to enter the top group of the euro. When José Luis Rodríguez Zapatero came to power, Pedro Solbes returned to the Ministry of Economy and took revenge for what happened eight years earlier. Solbes revealed in 2004 that the PP Government had left him with more deficit than he said, so that 2003 did not end in balance, but with a 1.87% deficit. It did not have serious consequences, because Spain had already entered a wave of growth and high revenue that absorbed the gap without problems.
The worst came in 2012. The public deficit left by the Zapatero Government was finally 9% in 2011, much higher than the 6% committed by its minister Elena Salgado. The new data, revealed by Cristóbal Montoro, increased the distrust of the markets and accentuated the pressure on Spain's risk premium, placing it on the exit ramp towards rescue, as Greece, Portugal and Ireland had already suffered.
