06/06/2022

The pathetic figure of 36%

3 min
Opinion article by Andreu cortijo Collell

The publication of the regionalised statistics on the execution of infrastructure investment items in the 2021 state budgets, with the pathetic figure of 36% for Catalonia, has caused astonishment. Let's discuss it.

Executing budgets is not simple, and it is becoming less and less so. For many reasons, almost all of them good, drawing up a budget is an increasingly lengthy process, but budgets remain annual and the length of the year remains immutable. Recognising this problem, in the EU budgets are approved for seven years. But this is difficult to transpose to states because it would mean reducing the opportunities for a Parliament to influence the budget. In democratic regimes with strong parliamentary control – which is not the case of the EU – the budget approved on an annual basis is a central feature.

It is important to understand that the cost of not executing a budget is not only that the completion of projects is delayed (sooner or later, La Sagrera train station will be completed) but also that the resources allocated to a non-executed item are lost for the purpose of the item. They become generic carryovers that allow the State to issue less debt. Budget appropriation money is like the water in Heraclitus's rivers: next year's may have the same label, yet it will be different money from this year's

It is difficult to execute but vital to do so. It follows that the diligence, interest and effectiveness of those responsible for execution are key. If they are sufficiently motivated, execution can be achieved. If they falter, there is little margin: we can find ourselves at 36% in no time. The Sánchez government has been very clear about this when it comes to European NextGeneration funds. The imperative to execute has informed its regulatory and managerial action. Terms like PERTE have become familiar. We will see if they succeed. As the interest and attention, the mood, is considerable, I think they will. And I regret, of course, that the same diligence is not applied to the budgetary execution of the Spanish government's own funds, although I understand that there is a difference: European funds that are not executed go back to the EU. Valencian funds that are not executed return to the State.

Experience also indicates that the proximity of managers to beneficiaries is important. It is not necessary to appeal to malevolence to understand that the sensitivity of managers towards what is close to them will be relatively more vivid. The difference may be small but, given the limited days of the year, it can end up making a big difference. On this issue, the logic of proximity is strong.

In the fight against perennial poor execution, we must denounce and express our grievances, otherwise there will be no incentive to solve anything. But we must also formulate lines of action and concrete ideas. I will mention four in a non-systematic way.

1. The first is to convey to politicians currently holding office in Madrid, but with a political career in Catalonia, that we expect them to keep a watchful eye. It is normal in a democratic regime – I have experienced it in the USA – that politicians in a central government look after the legitimate interests of their most direct constituents. Of course they have to do so in a proportionate manner, but it would be absurd for them to respect biases that harm their region.

2. As a result of Catalonia's 2006 Autonomy Statute, the methodology of compensating non-executed parts of the budgeted investment by means of a state assumption of the Generalitat's expenditure was introduced. The Constitutional Court's 2010 overruling of the Statute meant the government was no longer a legal requirement. I have never fully understood why "We don't have to do it" becomes "We will not do it". In any case, the compensation mechanism could be brought back.

3. In fact, since 2006, there has been a bilateral commission for monitoring state investments, but it has practically never met. Now there is talk of reviving it. It is a pity that it has already been proven that agreeing to talk formally from time to time on the subject has not been enough to encourage the central government to work hard to implement it. It is an approach, therefore, which lacks credibility.

4. I think a step forward would be to set up a consortium for the execution of infrastructures between the State and the Generalitat. It would go in the same direction as the Budget Execution Office advocated by Pere Macias, among others, but it would have to go much further in two aspects: it should be a permanent and universal structure, that is, for all infrastructure, and it would automatically receive all resources allocated in the budget for work to be executed in Catalonia.