The Expenditure Rule in the Spanish Organic Law on Budgetary Stability and Financial Sustainability and its Impact on the Autonomous Communities

Abstract

Spanish Autonomous Communities cannot incur a structural deficit, and their debt levels must not exceed the limit set out in the organic law on budgetary stability. This law also includes an expenditure rule that limits their non-financial expenditure. In the last few years, significant differences have been found between the constraints imposed on these regional governments through the budget balance rule and the expenditure rule, which could hinder the internal consistency of the fiscal framework. The present work identifies the reasons for such differences, and examines them for the regional subsector as a whole and for each autonomous community.