He Council of Ministers has approved extend by ten years the period for Social Security to return two loans that the State granted it in 1992 and 1993whose total value is 3,259.6 million euros. This extension is contemplated in a Royal Decree-Law related to economic, tax and Social Security measures. The regulations, published in the Official State Gazette (BOE) on Tuesday, are already in force.
Now, what is this measure and why has it been approved? Apparently, and as detailed by the Executive in the decree, these loans had already been extended on other occasions through regulations approved in 2003 and 2013. Now, the Government considers that a new extension is necessary while it is decided whether the loans will be forgiven or compensated through state transfers to Social Securityas the Court of Accounts has recommended repeatedly when analyzing the General State Accounts. Thus, this postponement will affect:
- 1992 loan: An amount of 1,686.18 million euros, intended to cover obligations arising from the costs of Social Security healthcare.
- 1993 loan: For a value of 2,073.49 million euros, granted within the framework of the General State Budgets of 1994.
It should be remembered that these loans were granted when the old pesetas existed and were intended to alleviate financial tensions in the Social Security system at that time. “Until the Government determines whether the State should proceed to forgive these loans or grant transfers to Social Security that allow their repayment, as the Court of Accounts has been recommending in the audit of the General State Accounts of all the years, it is essential to establish a new 10-year extension for its cancellation” they explain from the Government.
With this extension, the repayment of the loans is postponed until 2034, giving the Government more time to find a solution that stabilizes Social Security accounts. This postponement responds to the current economic difficulties, marked by the aging of the population and the increase in expenses on pensions and health and which affect, for example, the public pension system, among others.
How this measure affects the citizens and homes of Spain
This news does not have a direct and immediate impact on the economy of Spanish families and homes, since it is mainly related to the financial sustainability of Social Security. However, it could influence the future as it affects key areas such as pensions, social benefits and public healthcare.
Although the extension does not imply immediate changes in the services that citizens receive, it highlights the economic tensions of the system, which could lead to future decisions about its financing. If Social Security accounts cannot be balanced in the long term, reforms could be proposed that affect workers’ contributions, taxes or the way benefits are calculated and distributed. Therefore, measures like this seek to gain time to avoid hasty decisions.