The Governor of the Bank of Spain, Pablo Hernández de Cos, defended this Tuesday that the response from the field of fiscal policy to the effects of the war in Ukraine must “focus on the most vulnerable households and on the companies most affected by the disturbance”.
Hernández de Cos has also considered that the response must be “temporary”, firstly because it is considered that this “disturbance” will also be temporary, and secondly because “Spain already had a high level of public debt before the pandemic and the structural public deficit is also high”.
At an informative breakfast organized by the Institución Futuro in Pamplona, Hernánez de Cos stated that “we should not add new increases in permanent spending, at least without incorporating permanent financing, which is why the measures also have to be temporary”.
Thus, regarding the 16,000 million plan announced by the President of the Government of Spain, Pedro Sánchez, Hernández de Cos has stated that “it seems to us that fiscal policy has to give an answer, I do not know all the nuances and details -of the plan announced by Sánchez-, I know the music and I understand that it goes along that line”.
In this sense, he has insisted on defending a “strong but temporary support, and it has to be focused on the sectors most affected by this crisis.”
In addition, he added that “the context of high inflation makes us think that the measures have to be selective, because otherwise they could also lead to an increase in inflation”.
On the other hand, he has stated that “the support of fiscal policy in the short term and at the same time a message of strong commitment to budgetary stability” must be combined.
To do this, he has proposed “the design of a fiscal consolidation program” for its implementation “once the recovery is solid.” “Anticipating the design of fiscal consolidation could be successful in alleviating those potential tensions,” she said.