International Monetary Fund
Spain: Staff Concluding Statement of the 2022 Article IV Mission

Assessment and monitoring of the Spanish economy by the IMF

The International Monetary Fund (IMF) has published the preliminary findings for Spain, after the official IMF staff visit as part of the regular monitoring of the economies of its members.

The main conclusions are the following:

  • The IMF expects a sharp moderation in economic growth in the coming quarters (it forecasts GDP growth of 4.6% in 2022 and 1.2% in 2023), with risks mainly to the downside.

  • Public support measures to fight against the rise in energy prices: although they have mitigated the negative impact on households and corporates and there have been initiatives well targeted to the most affected and vulnerable groups, in their opinion, looking forward the measures should be more targeted at the most vulnerable sectors, with the lowest fiscal cost and encouraging a more efficient use of energy (criticizing the discount on gasoline) without distorting price signals.

  • A credible medium term fiscal consolidation plan is needed to have fiscal capacity in the face of future shocks. Public support measures during the Covid crisis were successful but expensive and public debt stood at 118% of GDP at the end of 2021. Looking forward, the room for manoeuvre in the face of future shocks will be reduced both by the increase in pension expenses and by the rise in interest´s debt.

  • Temporary levy on banking and the energy sector: the IMF criticizes that it is applied to income and not to profits without taking into account the higher costs due to inflation and economic deterioration and the need to invest in these sectors. It also points out that the tax should be temporary and should not replace a necessary reform of the tax system. In the case of the financial sector, it will be necessary to monitor its impact on the availability of credit, on the cost of credit and on the resilience of entities.

  • Banking sector:

- Alert of a further deterioration of credit risk in households and corporates, due to worsening macroeconomic developments and financial conditions to curb inflation. The impact will be greater in SMEs and in the lowest income sectors. The IMF comments that the measures to alleviate the mortgage payment due to the rise in Euribor that are being discussed should focus on the most vulnerable clients.

- The real estate sector does not show significant imbalances, so it is not necessary to activate macroprudential measures

- The stress tests show that the capital buffers are adequate, although it calls for prudence in the provisions and in the recognition of risks.

  • Next Generation European Funds: The use of European funds for recovery after the Covid crisis is accelerating. However, the IMF points out that it is difficult to monitor its actual execution in the economy and that it is key to improve information and coordination between governments and with the private sector.

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