Social Security budget for 2023
Fecha: noviembre 2022
Eduardo Bandrés Moliné
Social Security
SEFO, Spanish and International Economic & Financial Outlook, V. 11 N.º 6 (November 2022)
The indexation of contributory pensions is the main driver of the budgeted growth in Social Security expenditure in 2023. The increase in the number of pensioners and in the average pension could imply higher than budgeted spending. On the revenue side, the main development is the first-time application of an additional common contingency contribution of 0.6% to fund the so-called intergenerational equity mechanism. The separation of funding sources between contributory and non-contributory, in line with the Toledo Pact recommendations, and the contribution to balancing the budget is addressed by state transfers, which now account for over 20% of non-financial income. The nominal deficit is forecast at 7.18 billion euros in 2023 and is once again covered by a new loan from the state. However, the overall hole in the contributory block of the Social Security system could reach 25.47 billion euros, equivalent to 1.8% of GDP. By year-end, the Social Security’s debt with the state will stand at over 106 billion euros. The real problem, however, is not the volume of debt piled up with the state but rather the financial sustainability of the Social Security system in the medium- and long-term. That is why it is important to accurately trace the expected trajectory in revenue and expenses, especially those related to the pension system, which will determine the system´s overall health.