The Fiscal Council warns about the risks of optimistic projections for GDP 2024-2028.

The recent analysis by the Fiscal Council on the Multiannual Macroeconomic Framework (MMM) 2024-2028 has generated a wave of concern in the country’s economic sphere. This report, which issues a non-binding opinion but is crucial for fiscal planning, warns about the risks associated with optimistic projections for Gross Domestic Product (GDP) growth. In particular, it questions the assumption of an average GDP growth of 3% in the medium term, which exceeds recent growth rates and the potential estimated by the Ministry of Economy and Finance (MEF), which ranges between 2.3% and 2.6%. The president of the Fiscal Council emphasizes that these projections, while they may seem encouraging, could become a dangerous trap. Assuming growth rates higher than what the economy has demonstrated in recent years may lead to an overestimation of fiscal revenues. This overestimation, in turn, could result in wider fiscal deficits than anticipated, jeopardizing the financial health of the State. The warning is clear: setting ambitious fiscal targets based on optimistic projections may be reckless. The report also points to an increase in projected public spending for 2024 and 2025 that, according to the Fiscal Council, could absorb temporary revenues during that period. This situation contrasts with the urgent need for effective fiscal consolidation. The projection of a growing GDP above its potential does not align with the cyclical reality faced by the economy, and the proposed scenario is unsustainable. The warning becomes more severe when considering that the next administration will inherit an extremely demanding fiscal responsibility. The need to implement a fiscal consolidation of two percentage points of potential GDP within a three-year timeframe, in a context of declining revenues, could lead to stagnation in the real growth of spending during the 2026-2028 period. Such a scenario, if it persists, could be devastating for the government’s ability to fulfill its functions and address the needs of the population. The Fiscal Council also mentions the recent easing of fiscal rules, which, in theory, should facilitate deficit management. However, complying with the deficit rule for 2024, which sets a limit of 2.8% of GDP, presents a formidable challenge. With a cumulative deficit of 4% of GDP as of July this year, current projections are under threat, and failing to meet this rule for the second consecutive year could have serious consequences for the country’s fiscal outlook. The repeated failures to meet fiscal targets feed a cycle of distrust that can erode the government’s credibility with economic agents. In a context where sovereign credit rating downgrades have already occurred, the risk of further downgrades increases. This issue is exacerbated in an increasingly hostile global financial environment, where the loss of investment grade could become a tangible reality if the situation is not managed properly. In this context, the evaluation of the MMM does not offer reassurance. Instead, it generates a sense of unease among economists and analysts, who fear that optimistic projections are not grounded in real data and may therefore endanger the fiscal and economic stability of the country. The need for a more conservative and reality-based approach is pressing in the public debate. It is essential to establish a constructive dialogue among various economic and political actors to reconsider fiscal targets and adjust growth projections to a more realistic level. The financial health of the country depends not only on expectations but also on concrete and responsible actions that ensure a sustainable future. In conclusion, the Fiscal Council issues a warning that cannot be ignored. The country's economy faces significant challenges, and prudent management of public finances is imperative. The balance between growth and fiscal sustainability must be carefully calibrated if we wish to avoid falling into a cycle of crisis that jeopardizes the well-being of all citizens.