In the case of 2021, the expansionary stance would be mainly due to the impact on growth of the NGEU programme.6 Therefore, should any of the risks mentioned in relation to the impact of this programme materialise, the expansionary stance of fiscal policy could ultimately be smaller in 2021. 2.4  Government debt in the Draft Budget  According to the Draft Budget, the general government debt-to-GDP ratio will reach a historic high of 118.8% of GDP in 2020 and will edge down to 117.4% in 2021. This fall would be exclusively a consequence of the strong nominal GDP growth forecast in 2021, since both the budget deficit and the stock-flow adjustments would exert upward pressure on the government debt ratio.7  Nonetheless, taking into account the risks I have already mentioned, to GDP growth (on the downside) and to the level of the budget deficit (on the upside) in 2021, the government debt ratio may behave less favourably than projected in the Draft Budget. 6  Although this programme will have a neutral effect on the general government balance, by partly closing the negative output gap forecast for that year, it will increase the cyclical component of the balance – calculated as the product of the output gap and its elasticity to the cycle (0.6, according to the OECD) – and the structural deficit.
In this respect, and in what, in my view, should be the third main defining principle of Spanish fiscal policy in the coming years, public resources should be geared towards those uses or initiatives that have the most capacity to increase future economic growth. Apart from certain support measures that may be necessary in the short term, it is vital that economic policy in general, and budgetary policy in particular, are geared towards achieving the structural transformation of the Spanish economy, to correct some of the shortcomings that have accompanied us in recent decades and to ensure that we are not left behind in the profound changes that are taking place worldwide, including in terms of the level of globalisation, digitalisation and ecological transformation of our economy. Lastly, it is advisable that budgetary policy, rather than promoting initiatives that involve acquiring future payment commitments that will drive up our structural deficit, instead encourages temporary increases in the deficit, concentrated on items that can boost our growth potential in the medium term. I will refer repeatedly to these basic principles later. 2 Draft State and Social Security Budget for 2021 In this section I wish to offer my assessment of the main revenue and expenditure measures included in the Draft Budget, of the general budgetary policy stance envisaged for 2021, and of expected developments in Spanish government debt.