The agency criticizes the fuel bonus as “they disproportionately benefit” the wealthiest, so it welcomes the “temporary” tax increases for higher-income businesses and households
The International Monetary Fund (IMF) expects the Spanish economy to grow only 1.2% in 2023, one point below government estimates. The institution expects progress to be “relatively weak” in the coming quarters due to reduced exports and deterioration in household consumption. Yet, in a virtual press conference with the Spanish media, the head of the IMF’s mission to Spain, Dora Iakova, has argued that a recession is ruled out, including the technical recession (which consists of two consecutive negative quarters, as recently noted by the tax). Authority), even though the fourth quarter of 2022 and the first of 2023 are “very close to zero”.
Inflation will moderate, according to the bureau, mainly due to the “already high base level of 2022”, which means that the rate will decrease compared to the previous year. Also for a “certain normalization” of energy prices on the world market. Despite this, the IMF believes that the CPI will end the year at 8.8% and fall to 4.9% next year, which is well above the institution’s target of 2%.
With such high inflation, linking pensions to the CPI means a larger package of additional measures to “counter the sharp increase in future expenditure” on this item. The IMF predicts that after the pension reform that indexes them to the CPI, annual spending will increase by more than 3% of GDP in 2050. It shares the support measures implemented this year, such as the reform of the premium system for the self-employed. employees or the commitments to extend the period for calculating old-age pensions, as well as the increase in the maximum premium income. Still, the IMF warns that until the specific details of these reforms are known, it will not be known whether they will be sufficient to maintain the sustainability of the pension system.
In its closing statement following the mission to Spain under Article IV of the IMF Consultation Agreement, the organization expects energy prices to remain at high levels next year, prompting the increase of “additional temporary” revenues to support the most vulnerable to finance is “a welcome strategy”. The government’s proposal to raise taxes on businesses (electricity and banks) and high-income households is thus “appropriate,” the IMF said in its report. Of course, it emphasizes that these measures should be “temporary” and should not be seen as a substitute for “necessary medium-term tax reform”.
Many support measures for households and businesses to cope with the crisis have come “at the right time”, says the IMF, although it criticizes that another part of the fiscal support has been allocated to non-targeted measures and that prices are “distortive”, such as the reduction of the electricity tax or the bonus of 20 cents per liter of fuel. “They are costly from a tax point of view and disproportionately benefit higher-income households,” he says.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
