22.12.2020  Testimony by the Governor of the Banco de España before the Audit Committee on Democratic Quality, the Fight against Corruption, and Institutional and Legal Reforms Congress of Deputies Pablo Hernández de Cos Governor  Ladies and gentlemen, I appreciate your request that I should appear before this Audit Committee on Democratic Quality, the Fight against Corruption, and Institutional and Legal Reforms to address the question of the impartiality and autonomy of independent economic authorities. Allow me to take as a starting point for my address the importance the economic literature has attributed in recent decades to the quality of institutions, as a linchpin of economic development and growth. As part of this broad notion of the quality of institutions, independent agencies – over which governments have no controlling or management powers – are particularly important for achieving certain goals. Indeed, in some areas of the economy independent institutions have a long-standing tradition in market economies and are a basic pillar of their institutional structure. The rationale behind such institutions lies in considerations of general interest, with the conviction that independence allows a greater benefit to be had for society than that which would be attained were powers assumed directly by political authorities. Independent agencies acquire this status by decision of the maximum political authorities of the State (parliaments), and are given a remit in specific decision-making areas (for instance, monetary policy for central banks) and a legal framework to decide and act independently in the matters under their purview.
It would seem, therefore, that no significant growth could  BIS Review 84/2005  1  be expected next year if the underlying pace of economic activity does not accelerate from this year’s level. The increase in Malta’s fuel bill is also roughly equivalent to the narrowing of the fiscal deficit achieved over the past seven years. In the circumstances, it would be foolish to allow the progress made at considerable cost to be blown away by this external shock. An attempt to cushion the increase in the oil price through borrowing may be economically justifiable in terms of sustaining the incipient recovery suggested by recent GDP data. On the other hand, any borrowing would have to be serviced; and, because it would constitute interference with market signals, it could also retard the process of economic adjustment. The only long-term remedy to counteract the effects of higher fuel prices is to expand productivity and output, and therefore incomes. Indeed, the oil price shock is another compelling reason, if one were needed, for redoubling our efforts to energize the economy. … and by a higher dependency ratio due to population ageing. The third challenge is the demographic shift caused by population ageing, such that the ratio of the working age to the dependent population is expected to shrink from almost four- to just over two-toone by the late 2020s. Some effects of this trend are already being felt this year as the first cohorts of the baby-boom generation reach retirement age.