Recent projections by the Independent Authority for Fiscal Responsibility (AIReF) indicate that Spain's public deficit, which has been steadily declining since the economic disruptions of the COVID-19 pandemic, is poised to rise significantly from 2027 to 2029. The forecast suggests an increase of approximately €10 billion within this three-year period, largely driven by rising defense and pension expenditures.

The AIReF report, part of its Medium-Term Fiscal and Structural Plan Outlook for 2025-2028, anticipates a drop in the public deficit to 2.8% of GDP in the current year and down to 2.3% of GDP in the following year, 2026. However, this trend is expected to reverse starting in 2027, with the deficit predicted to rise to 2.5% of GDP, further increasing to 2.7% in 2028, and reaching 2.9% by 2029.

The anticipated increase in the deficit, estimated to amount to roughly 9,600 million euros—though possibly exceeding 10,000 million euros—stems from several factors.

Chief among these are the increased financial obligations related to an aging population, which will elevate pension spending, alongside a substantial rise in military investment that has been described as structural and expected to influence public finances significantly.

Additionally, there is a forecasted rise in interest burdens on public debt.

Cristina Herrero, president of the AIReF, highlighted during the report presentation that the government's recent decision to boost defense spending by €10,741 million will have noticeable repercussions on national debt and the public deficit.

She criticized the government's approach to this increase, arguing it was improper to avoid legislative debate in the Congress of Deputies regarding such a significant expenditure increase.

Herrero stated, "It is not very correct for the government to foresee credit transfers from the extended budgets of 2023 to promote this matter,” referring to the potential maneuvering of budgetary rules that raise concerns about fiscal transparency.

The AIReF's analysis underlines that the general budget law establishes stringent requirements for budget modifications and transfers, and the ongoing trend of circumventing these requirements has stirred discussions about fiscal accountability.

Herrero pointed out that these practices have emerged as exceptions in the budget laws since 2021, which allows the Ministry of Finance or the government to authorize credit transfers that typically would necessitate more rigorous adherence to established rules.

While such transfers are permitted under law, they have been characterized as undesirable by the AIReF, who regard them as a covert reform of the general budgetary law.