Source: European Parliament
Under the Debt Sustainability Analysis (DSA) framework, social contribution projections, including those paid into the pension system, are ordinarily assumed to remain constant as a ratio to gross domestic product (GDP) during the 10 years that follow the end of the adjustment period, i.e. from 2032 to 2041, unless different assumptions are duly justified.
In the case of Spain, its medium-term fiscal structural plan (MTFSP) internalises the impact of compensatory revenue measures legislated in 2023 (along with the pension reform) that will materialise after 2031.
The cumulative increase in social contributions over the following 10 years is estimated at 1.8 percentage points of GDP, which improves the debt dynamics.
This assumption relies on the legislated measures described in Spain’s Country Fiche accompanying the 2024 Ageing Report. These measures lower the adjustment required to put debt on a plausibly downward path and enable a higher average net expenditure growth over the adjustment period.
The revenue increases over the years 2027-2031 resulting from the potential activation of the closure clause were not included in the assumption of the Spanish MTFSP.
Under the commonly agreed methodology, the activation of the closure clause would have been considered a discretionary revenue measure and would be taken into account only ex post in the assessments of compliance with the net expenditure rule.
Therefore, the updated estimates of the independent fiscal authority (AIReF) do not imply that the Spanish plan deviates from the debt reduction requirement.