Pablo Hernández de Cos: Testimony before the Parliamentary Budget Committee

Testimony by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, before the Parliamentary Budget Committee in relation to the Draft State Budget for 2021, 4 November 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and gentlemen,

I appear before this Committee as part of the process to discuss and approve the State and Social Security Budget for 2021. The main aim of this Budget should, in my view, be to provide for the recovery of the Spanish economy in the coming quarters and to mitigate the considerable adverse impact caused by the COVID-19 pandemic to our economic growth and welfare. I shall begin by first describing the recent behaviour of the Spanish economy and, against a background marked by exceptional uncertainty, its possible course in the coming quarters, in light of the Banco de España's projections.

This description will allow me to assess the Government's macroeconomic forecast which, as is habitually the case, frames the Draft Budget. Secondly, I shall offer my view of the main aspects of the Draft Budget for 2021, including the fiscal policy stance, its composition and the risks to the budget deficit target being met. Lastly, I shall set out what I consider to be the most significant challenges for Spanish fiscal policy in the medium term.