The FM, Jordi Cinca, has presented the Budget Bill for the year 2019 this Monday

photo: Govern

The Finance Minister of Andorra (Pyrenees), Jordi Cinca, presented the Budget Bill for the year 2019 this Monday. As already moved forward in the press conference after Wednesday’s Council of Ministers, this budget project is the first that fully complies with the objectives established in the Law on the Sustainability of Public Finances and Budgetary and Fiscal Stability. In addition, it presents a management surplus and forecasts the lowest cash deficit in the last decade, below 0.5% of GDP.

The 2019 Budget Bill maintains the budgetary policy begun in 2012, which has allowed for the consolidating and diversification of revenues and the tendency towards budgetary equilibrium. For the first time, as a result of the careful management that has been carried out in recent years, the ability of the administration to generate enough revenue to face the expenses and investments is demonstrated. In fact, Cinca has pointed out that despite being the first budget to get it, the last budgetary settlements have already been or have been very close to this balance.

Specifically, the budget foresees revenues of 444,771.51,15 euros and costs of 444,535,734.55 euros, which represents a surplus of 235,316.60 euros. Once the financial expenses, which were foreseen at 13,372,765.28 euros, are generated, a cash deficit of 13,137,448.68 euros is generated. In this regard, Cinca pointed out that this is the lowest deficit in the last fifteen years, which also falls below 0.5% of GDP, a parameter that places Andorra better than the surrounding countries and totally adapted to international requirements.

In terms of revenue, an increase of 4.64% is projected based on the forecast of GDP increase by 2019 and also taking into account the evolution that is being observed in income during 2018.

Direct tax revenues are 9.83% higher than the 2018 budget, mainly due to the increase in income taxes, which increase 13.82%. Income from indirect taxes, which are those that have a higher weight in public finances, also increase by 4.11%, reaching 303,983.855,09 euros. This chapter focuses on the improvement of the economic evolution with regard to the increase of visitors and the rise in domestic consumption, which increases the collection planned for the IGI by 6.36%, and the good behavior of the real estate sector, which affects an increase in property transfer tax of 24.09%.

With regard to current expenses, an increase of 2.54% is forecast, and they have been calculated with the forecast that the CPI increases by 1.7%.

Specifically, the most significant increase is in staff costs, since, in addition to the 2018 CPI, it should be taken into account that the 2018 budget was calculated with a very high CPI forecast lower than the one that was finally registered. Therefore, the budget was prepared based on the forecast of liquidation of this chapter, which stands at 114.2 million euros, and not in the 110.745.446.97 that had been budgeted.

Taking this figure into account, the increase in personal spending would be 4.37% compared to the expected liquidation for 2018. This increase is mainly due to the increase of the CPI for 2019, which is estimated at 1.7%, and also because 2019 is a year in which there is a significant number of employees of the administration (the triennials), and also by the increase in contributions to the pension plan.

Regarding current transfers, they stand at 215,025,455.54 euros, with a decrease of 2.6 million euros from the transfer planned for the Andorran Bank of the Social Security, thanks to the increase in the contributions planned; the increase of the transfer to the communes is 2 million euros, due to the application of the new law of transfers, that does not stop applying the freezing of the transfers that had been done in the last years, and the increase in transfers to families and non-profit institutions, of 2.7 million euros, which is essentially due to the increase in various social assistance programs.

With regard to capital transfers, they are reduced by 4.7%, and Cinca has indicated that investments in infrastructure and buildings are increasing to the detriment of investments in the road network. Among the most significant planned investments, the minister has indicated the unit of radiotherapy, the adaptation of the building of the former residence Solà d’Enclar to locate the intensive residential center, the work in the building of Ràdio Andorra and the improvements to the Andorran School of Santa Coloma.

On the other hand, the bill includes several final provisions that modify other laws linked to the budget. The Law on the Creation of Public Society Andorra Telecom, the Law on the Sustainability of Public Finances and Budgetary and Fiscal Stability, the Law on the Promotion of Electric Vehicles, the Law of the Body of Prevention and Extinction of Fires, the Law on Personal Income Tax, the Law on Indirect General Tax and the Accounting Law of businessmen.

The Minister of Finance has explained in detail that the Sustainability Law of public finances and fiscal and budgetary stability is modified to make it clear that the budget framework should only be approved at the beginning of the legislature and updated during the mandate based on the closures, and to simplify the calculation of maximum allowable expense. These changes, however, will take effect from the 2020 budget, and therefore what has been presented today is in line with current regulations.

The amendment affecting the Fire and Fire Prevention and Extinction Body aims to allow the cost of research, rescue, rescue or relief operations to be affected by the impediments caused to the people affected. In this regard, the minister indicated that the cost of these rescue activities has increased significantly in recent years, and that the Government cannot assume it in cases where motivation is imprudence.

Finally, the Business Accounting Law is modified to introduce a fee of 50 euros for the deposit of accounts when done in person. The objective is to promote electronic administration, while the measure allows the expenses related to the management of paper accounts. However, the first two years are expected to receive a bonus of 50 and 25% respectively.

See also Andorra business guide

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