Public Administration balance falls 79.4% in January to 1,177 million

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In detail, in January this year, tax revenue fell 8% to 4,111.5 million euros, influenced by the performance of indirect taxes, that is, VAT. Contributory income, “continues to mirror the dynamics observed in the labor market”, increased by 10% compared to the same month in 2023. Social Security contributions increased from 2,351.1 million to 2,585.1 million.

The difference between State revenues and expenses in January totaled 1,177 million euros, less than the positive budget balance for the same month of 2023, which was 2,111.3 million. This means 934 million euros less, or a drop of 79.4%. This is from the perspective of public accounting.

The data was released by the Ministry of Finance.

The drop in the balance reflects, on the one hand, the drop in tax revenue and, on the other, the increase in public expenditure.

In a statement, the Government says that there was a slight improvement in effective revenue of 0.4%, impacted by the 10% increase in social contributions and, in the opposite direction, by the decrease in tax revenue (falling by 8%).

The Ministry led by Fernando Medina reveals that there was a 15.7% increase in effective expenditure, partly explained by expenditure on interest on public debt (+98.3%), but also with the 19.7% increase in expenditure on current transfers; and with the rise in personnel expenses, which grew by 6.5%.

In detail, in January this year, tax revenue fell 8% to 4,111.5 million euros, influenced by the performance of indirect taxes, that is, VAT.

Contributory income “continues to mirror the dynamics observed in the labor market”, increasing 10% compared to the same month in 2023.

Social Security contributions increased from 2,351.1 million to 2,585.1 million.

Effective expenditure increased by 15.7%, due to the growth in interest expenditure in the first month of the year. This almost doubled compared to January 2023. But it is also due to relevant increases in other items, says the Ministry of Finance.

Thus, primary expenditure (which excludes interest on public debt) increases, in January, by 14.1% compared to the same month in 2023.

What leads to this increase? According to the Budget Execution, the increase is due to the increase in personnel expenses (+6.5%), due to the new transversal salary updates for Public Administration workers. As well as the impact of the increase in the minimum monthly remuneration (minimum wage) to 820 euros.

Justifying the increase in State spending is also spending on investment in Central Administration and Social Security (excluding Public Private Partnerships) which grew 37.8%, namely investment in the Railway.

The Government also mentions the expenditure on social benefits (other than pensions) which rose 29%. Which largely reflects the new IAS update and the increase in remuneration. “In particular, the increase in spending on the solidarity supplement for the elderly stands out, which more than doubled in one year (+102.6%), as a result of the increase in the reference value.

But it also reflects the family allowance for children and young people (+60.1%), as a result of structural increases in the amounts of family allowance to follow the evolution of prices for the essential food basket.

Also helping to increase spending is the social benefit for inclusion (+37.6%) and also the increase in spending on the subsidy to support informal caregivers (+62.9%).

Pension expenditure increased by 24.2%, affected by the payment of charges relating to IRS withholdings and the effect of the mid-term increase.

The Government also reveals the contribution of the actual expenditure of the National Health Service, which grew by 8% year-on-year, reflecting a 9% increase in personnel expenditure.

Still in the SNS, the stock of late payments decreased, in January, by 26.1 million euros compared to December 2023, which reduced this stock from 140.6 million to 114.5 million euros.