Urgent Need for Savings in Climate-Damaging Subsidies and Infrastructure Projects

In light of the recent increase in the deficit forecast by the Fiscal Council to 4.4% and 4.1% of GDP for 2025 and 2026 respectively, the need for prudent savings has become evident. The Fiscal Council has indicated that the federal government's consolidation package is insufficient to address the financial challenges facing the country. This situation has been exacerbated by a downturn in economic conditions and a significant deterioration in the financial health of regional and local governments.

To effectively tackle this issue, it is essential to implement strategic savings measures, which should include the elimination of environmentally harmful subsidies. The Fiscal Council previously noted that abolishing preferential treatment for diesel and company cars could yield immediate savings exceeding one billion euros. Despite this, the government has opted to introduce new subsidies for polluting vehicles, a decision that raises serious concerns about fiscal prudence.

Moreover, the government must re-evaluate its approach to new road construction projects. These initiatives not only require substantial taxpayer funding but also contribute to land sealing, put pressure on future budgets of local and regional authorities due to necessary maintenance, and exacerbate extreme weather events. Implementing cuts in this area would be a multifaceted solution, addressing both fiscal and environmental challenges.

Transparency in budgeting practices across regions and municipalities is also a crucial area for improvement. It is unacceptable for the public to discover in March whether regional governments have exceeded their budgets. Regular, monthly updates on budget execution should be mandated for all regions, similar to the federal level, to prevent unexpected financial burdens in the future.