Urgent Action Needed: Pushing for Recovery of National Budget in 2021 by the Court of Auditors
The Court of Auditors has published its annual report on the public finances' situation and outlook, warning about the increasing size of public debt and urging the government to take swift and decisive action to address the public finances' issues and ensure the long-term stability of the economy.
The report, published on July 2, highlights that public debt has doubled between 2020 and 2024, and by the end of the next decade, it is expected to account for the majority of the state's expenditures, surpassing Education and Defense combined. This alarming forecast underscores the need for a comprehensive and long-term strategy to address the public finances' challenges.
The report from the Court of Auditors suggests that the government should prioritize debt reduction in its fiscal policy decisions moving forward. To achieve this, a significant financial effort of €105 billion is required to reduce the public deficit below 3% of GDP by 2029.
The Court emphasizes the strong contribution of local communities to the rising public deficit, as reported in their 2025 review of local public finances. This suggests that efforts to reduce the deficit must also involve tightening expenditure and improving financial management at local government levels, not just central government.
The general framework for addressing the public finances' issues involves implementing budgetary discipline and controlling public spending across all levels of government. Targeted reduction in community/local government expenditures, which have been a key factor in the budgetary drift, is also necessary. Additionally, reforming fiscal governance to enhance transparency, accountability, and efficiency in public finances is proposed.
The report warns that the current trajectory of public debt could lead to a fiscal crisis in the future. It also emphasizes the growing concern about the sustainability of the public debt level. To monitor and evaluate the progress made towards reducing the public deficit, the Court recommends regular monitoring and evaluation.
The Court of Auditors warns that delaying efforts to reduce the public deficit is no longer an option. Immediate action is required to reduce the public deficit, as proposed in a series of measures including expenditure cuts and revenue increases.
In conclusion, the Court of Auditors advocates for a coordinated, multi-level approach to fiscal consolidation, emphasizing the necessity of both a significant budgetary effort (€105 billion) and local government expenditure management to achieve the deficit reduction targets by 2029. The report serves as a stark reminder of the urgent need for action to safeguard the future stability of the economy.
The finance ministry must prioritize the reduction of public debt in their future business decisions, in sync with the recommendations from the Court of Auditors. To attain this, a massive financial effort of €105 billion is needed to lessen the public deficit below 3% of GDP by 2029, as suggested in the report.
Moreover, politics play a crucial role in implementing this plan, as efforts to reduce the deficit must not only focus on central government but also extend to improving financial management and reducing expenditures at local government levels. This broad approach is essential to achieve the desired fiscal consolidation and ensure the economy's long-term stability as outlined in the general-news.
