Throughout this unusual XV Legislature, we have frequently heard the leaders of the PP and Vox in the Cortes, unlike the partners of Sánchez's government, demand time and again to fulfil the constitutional obligation to present the General State Budgets (PGE). The government's invariable response has been “just a moment, we will present them right away”, but the truth is that the Legislature began on 17 August 2023 and will soon complete its third year without the officials in charge of the Treasury having come to Congress to symbolically deliver the PGE to the president of the Lower House. Sánchez's governments are more than comfortable without budgets, and the opposition naively and fruitlessly demands that they be presented.
Unconstitutional failure to comply
The constitutional mandate is quite clear, but the consequences of non-compliance are not. Article 134.3 of the Constitution establishes that “the Government must present the General State Budgets to the Congress of Deputies at least three months before the expiration of those of the previous year” and the Sánchez governments have failed to do so by not presenting the accounts for 2024 and 2025, three months before the expiration of 2023 and 2024, respectively. Article 134.4 establishes that “if the Budget Law is not approved before the first day of the corresponding economic year, the previous year's Budget will automatically be extended until the approval of the new one” and the Sánchez Governments have proceeded to extend the PGE 2023 into 2024, 2025, and 2026, taking advantage of the fact that the year had expired without the corresponding budgets being approved.
In light of the repeated failure to comply with the constitutional obligation, the opposition from the PP and Vox took advantage of their absolute majority in the Senate to raise a conflict of powers with the Executive before the Constitutional Court (TC). On 22 October 2025, the Chamber approved with 144 votes from the PP (101 senators voted against and 14 abstained) a request to the Government urging it to present the PGE 2026 to correct a democratic anomaly. The Government ignored the request and the Senate proceeded to formalize the conflict before the TC on 22 December 2025. The Senate's central argument is based on the fact that the lack of presentation of the PGE and the repeated extension of expired budgets constitutes a failure to comply with the constitutional mandate and “requests the Constitutional Court to declare that the Government has violated the constitutional attribution of the Senate to participate in the approval of the PGE, in accordance with articles 66.2 and 134.1 of the CE, as well as to modify them and to control the action of the Government for not presenting this bill and for the abuse being made of the budgetary extension.” The TC admitted the conflict raised by the Senate against the Government on 24 February 2026 “for failing to comply with the constitutional duty to present General State Budgets for the years 2024, 2025, and 2026.” A matter that should be resolved with the utmost urgency continues to wait in the limbo of the TC three months later.
“In 2024, credits were increased by 77.341 million, which had to be covered by an increase in the outstanding debt of 60.323 million”
Budget extensions 2024, 2025, and 2026
Montero's management at the head of the Treasury until her departure on 26 March has demonstrated that it is possible to endure three years of a new legislature with the PGE 2023, presented and approved in 2022, avoiding all parliamentary controls to make real the words that the number 1 of the PSOE and President of the Government, fully aware of the difficulty of governing after losing the general elections held on 23 July 2023, directed to his party at the Federal Committee held on 8 September 2024: “we will govern with or without the opposition, with or without the cooperation of a legislative power that necessarily has to be more constructive.” And if it is not, worse for the legislative power.
There is a belief that the Government is tied hand and foot by being forced to adapt its policies to the allocations assigned in the extended budgets. Nothing could be further from the truth since the Executive enjoys even greater discretion by being able to modify allocations and increase credits in the Council of Ministers without the need to negotiate with parliamentary groups to gain their support in Congress. On 26 December 2023, the Government approved “an agreement establishing the criteria for applying the extension for 2024 of the General State Budgets of 2023”, thus fulfilling “what is stated in article 134 of the Spanish Constitution, where it is determined that if a new Budget Law has not been approved by 1 January, the previous year's General Budgets will automatically be extended until the approval of other public accounts.”
The agreement indicates the need to make changes in the allocations of items as a result of changes in “the organisational structure of the General Administration of the State”, concluding that “the extended State budget for 2024 amounts to 380.822 billion euros.” This figure is slightly lower than that in the draft PGE 2023 which “amounts to 386.088 billion euros, and it includes the credits corresponding to the investments and reforms of the Recovery, Transformation and Resilience Plan to be implemented in this exercise, amounting to 30.008 billion.” The subsequent budget extensions approved on 23 December 2024 for 2025 and on 23 December 2025 for 2026 maintain the total State expenditure budget at 380.822 billion. The Tables 1 and 2 summarise the evolution of the State expenditure budget, both consolidated and non-consolidated, from 2017 to 2025, showing that indeed the expenditure figures have remained frozen since 2023.
“Where are the 27,318 million euros of Next Gen funds called but not assigned? In pensions, in social spending? In Correos?”
A reality check
Table 3 shows the evolution of non-financial resources and expenditures of all Public Administrations, Central Administrations (AA. CC.), Autonomous Communities (CC. AA.), Local Corporations (CC. LL.), and Social Security Administrations (AA. SS.). In the ‘concept’ column appear the non-financial resources and expenditures of the different Administrations and in the following columns the figures corresponding to 2023, 2024, and 2025 and the percentage variations recorded in 2024 and 2025 and accumulated over those two years.
Although the figures discussed in the previous section suggest that the budget extension meets the requirement to maintain the State expenditure budget unchanged and is merely an extension, the reality indicates that the non-financial expenditures of the Public Administrations have grown at rates even higher than GDP. The largest increase until 2025, 16.63%, was recorded precisely in the AA. CC., followed by the AA. SS., 13.75%, and the CC. AA. 13.24%. Only the non-financial expenditure of the CC. LL., 6.57%, grew significantly below the growth of nominal GDP, 12.64%. In the Tables 1 and 2, the expenditures on personnel and on goods and services remain practically unchanged in 2024 and 2025, but the National Accounting figures from the IGAE record increases of 13.87% and 11.76%, respectively, between 2023 and 2025. The conclusion to be drawn is that extending the Budgets does not equate to freezing expenditure but rather provides greater discretion to increase it without accountability.
Discontent from the Court of Auditors PGE 2024
Regarding accountability. In addition to pointing out that “the balance of Social Security records a negative net worth for the eighth consecutive year” amounting to 106.138.7 million euros, financed with State loans whose accumulated amount reached 126.170.2 million in 2024, and “the existence of a significant structural deficit in the management of Temporary Incapacity due to Common Contingencies of the Collaborating Mutuals with Social Security” amounting to 2.677.3 million euros, the press release from the Court of Auditors published on 5 May indicated the following reservations regarding the budget execution corresponding to 2024:
- 1. Overvaluation of the budgetary result by 4.090.3 million euros due to incorrect temporal allocation of obligations and rights.
- 2. Existence of pending payments to justify or approve amounting to 1.627.1 million euros.
- 3. Overvaluation of tax and non-tax debtors by 11.263 million euros.
- 4. Undervaluation of Social Security debtors, SEPE, and FOGASA by 2.643.9 million euros.
- 5. Failure to account for late payment interest on Social Security debt by 781 million euros.
- 6. Reasonable doubts about the collectability of the debt for social contributions from public and private non-profit health institutions, subject to moratorium since 1995, amounting to 672.3 million euros.
“The AIReF already appreciates the increase in Defence spending in 2025. In Defence, with an increase of 3.200 million compared to 2024. In Industry with an additional 3.500 million. All with the 2023 General State Budgets extended”
The Court of Auditors also emphasised that the absence of PGE has created “uncertainty about the applicability in 2024 of certain rules linked to budget management” and forced budget modifications of such magnitude that “the definitive credits exceeded the initial ones by 77.341.9 million euros, of which 95% had to be financed by appealing to the variation of the outstanding debt balance, although the good performance of revenues allowed this variation of the outstanding debt balance to not reach this amount.” In other words, there was a lack of legal certainty in budget management, credits were expanded by a huge sum that had to initially be leveraged with increases in debt. And although the strong increase in revenues made it possible to finance part of the expanded credits, the Bank of Spain estimates the increase in outstanding debt in 2024 at 60.323.9 million.
Irregularities in the management of European funds
The Court of Auditors also stated that “the insufficiency of the budget credit to meet unavoidable commitments of passive pensions and minimum pension supplements led to the authorisation in November 2024 of two modifications for 2.389.4 million euros, both financed with surplus credits from service 50 ‘Recovery and Resilience Mechanism’, considering that they did not compromise the fulfilment of the PRTR nor the absorption capacity of the MRR.” Cuerpo, the first vice president and Minister of Economy, denied in an appearance before the Senate “having used European funds for the payment of pensions and defends the legality of making budget modifications.” Mr. Cuerpo: were those payments financed or not with surplus credits from service 50 ‘Recovery and Resilience Mechanism’ as stated by the Court of Auditors? Perhaps resorting to those funds from account 50 was a temporary measure that Montero resorted to in order to get by, but the Court of Auditors says nothing about whether they were subsequently fully restored.
The bad practices of Minister Montero in the budget execution of 2024 could have been repeated in 2025, only multiplied. Information published in El Mundo on 6 May and reported in the Brussels Signal on 7 May indicated that Sánchez's government “diverted at least another 8.500 million euros from budgeted items with European funds to pay for pensions, minimum vital income, other social expenses and even contributions to Correos” in 2025. If this information is confirmed, the total sum of funds used irregularly in 2024 and 2025 would reach 10.889.4 million. Perhaps the Court of Auditors will give another reprimand to the Government when it approves the budget execution corresponding to 2025 and everything will remain at that.
“A detail that would confirm the lack of liquidity of the State: At the end of 2025, the State Cash Accounting prepared by the IGAE indicates that the “State Current Account at the BdE” had a balance of 71 mn”
A deceitful Treasury
From the beginning, the opaque management of the resources of the EU's New Generation fund by Sánchez's governments has been denounced, something that is only possible, it must be recognised, because the EU institutions themselves left the management of the funds allocated to each of them in the hands of the member states based on recovery plans that included objectives, commitments to reform, and milestones with very grandiloquent but very vague names that made it difficult to appreciate their purpose and audit their compliance (see my article “Policies for economic recovery III: evaluation of the Sánchez Plan,” published in El Liberal.cat on 5 May 2021). In other words, the limited capacity of European institutions to audit the projects that recipient countries have financed with the funds allocated to boost the ‘energy’ and ‘digital’ transitions, a genuine catch-all, has enabled them to be distributed with great opacity, discretion, and lack of rigor by Sánchez's governments.
The latest update of Elisa, the data visualisation tool of the Recovery, Transformation, and Resilience Plan, dated 31 March 2026, indicates that the Ministry of Finance has called for projects amounting to 94.390 million of which 79.854 million have been allocated to various plans, with the amount of resolved calls reaching 66.982 million with a resolution rate of 71.0%. The question to be answered is what has the Treasury done with the difference between the resources called and those allocated to projects during these years: 27.318 (= 94.390 – 66.982) million. Well, more or less, something similar to what banks and savings banks used to do not long ago when a customer ordered a transfer: they kept the money and used it for their own benefit. The use of account 50 ‘Recovery and Resilience Mechanism’ fed with resources from the EU, deposited in a government account at the Bank of Spain, has been used to advance the payment of pensions, other social expenses, and debts to Correos. According to the AIReF (2025), the Government's decision to increase defence spending to reach 2% of GDP in 2025 “begins to be reflected in the data: the budget of the Ministry of Defence shows an increase in initial credits exceeding the total increase of 2024 by 3.200 million. In the Ministry of Industry, the increase exceeds 3.500 million. All with the PGE 2023 extended into 2024 and 2025.
I want to point out, finally, a detail that would confirm the lack of liquidity of the State. At the end of 2025, the Cash Accounting of the State prepared by the General Intervention of the State Administration indicates that the “State current account at the Bank of Spain” (CC) presented a very small positive balance, 71 million, in 2025, while the item “Other deposits at the Bank of Spain” (OD) showed a positive balance of 16.758 million. The situation in 2024 was even more dramatic because the CC presented a negative balance of -38.268 million and the item OD a positive balance of 20.863 million. These figures suggest that the government's CC at the Bank of Spain lacked the margin to meet payments to be made by the Treasury and Montero resorted to the OD item and used it as a wildcard to finance expenses in 2024 and 2025.
In several articles published in the magazine Consejeros, I coined the term “Manzanera Effect” to refer to the suspicions raised among professional economists by the replacement of Rodríguez Poo, president of the INE until June 2021, by Elena Manzanera, brought from the Institute of Statistics and Cartography of Andalusia, with the express mandate from Calviño to review the ‘methodology’ of National Accounts of the INE. According to the vice president, the INE undervalued GDP growth and overvalued the inflation rate following the pandemic and something had to be done to remedy such folly by changing the methodology of the accounts. Naturally, neither Calviño nor Manzanera were experts in National Accounting. Now, we can add another shadow of doubt to the colonization of institutions by Sánchez's governments that we could well call the “Montero Effect”, in honour of the deceitful practices deployed by the vice president and Minister of Finance, the well departed whom we will miss very little.
References
AIReF (2025) “More spending on defence, more debt?”, 31 October. https://www.airef.es/es/divulgacion/mas-gasto-en-defensa-mas-deuda/
El Mundo (2023) “The Court of Auditors warns of opacity in European funds: ‘There is no data on what reaches final recipients’”, 27 December. https://www.elmundo.es/economia/2023/12/27/658b102cfc6c83a3478b456d.html
El Mundo (2025) “Calviño reveals that she ‘helped’ the INE to increase economic growth data, despite it being an illegal interference in the EU”, 9 November. https://www.elmundo.es/economia/2025/11/09/6910e3b221efa07d6d8b458a.html
IGAE (2026a) “National accounting. Annual series. Non-financial operations. Total sector Public Administrations and their subsectors”, Ministry of Finance and Public Function. https://www.igae.pap.hacienda.gob.es/sitios/igae/es-ES/Contabilidad/ContabilidadNacional/Publicaciones/Paginas/ianofinancierasTotal.aspx
IGAE (2026b) “Extension of the budget for 2026”, Ministry of Finance and Public Function. https://www.sepg.pap.hacienda.gob.es/Presup/PGE2025Prorroga/MaestroDocumentos/PGE-ROM/doc/HTM/N_25P_E_V_1_101_1_1_2_A_1.HTM
IGAE (2025a) “Main economic indicators of the economic and financial activity of the State”, December. https://www.igae.pap.hacienda.gob.es/sitios/igae/es-ES/Contabilidad/ContabilidadNacional/Publicaciones/Documents/Ind-2025/2025_12.pdf
IGAE (2025) “Extension of the budget for 2025”, Ministry of Finance and Public Function. https://www.sepg.pap.hacienda.gob.es/sitos/sepg/es-ES/Presupuestos/PGE/PGE2024Prorroga/Paginas/PGE2024Prorroga.aspx
IGAE (2024) “Extension of the budget for 2024”, Ministry of Finance and Public Function. https://www.sepg.pap.hacienda.gob.es/sitos/sepg/es-ES/Presupuestos/PGE/PGE2023Prorroga/Paginas/PGE2023Prorroga.aspx
IGAE (2023) “Draft General State Budgets 2023”, Ministry of Finance and Public Function. https://www.sepg.pap.hacienda.gob.es/sitos/sepg/es-ES/Presupuestos/PGE/ProyectoPGE2023/Paginas/ProyectoPGE2023.aspx
Infodefensa (2025) “The Government will inject more than 2.000 million into Defence for acquisitions and logistical support”, 6 April. https://www.infodefensa.com/
texto-diario/mostrar/5244994/gobierno-inyectara
-2000-defensa-millones-adquisiciones-apoyo-logistico
Ministry of Finance (2026a) “Consolidated General State Budgets 2017-2025, extended 2026”, January. https://www.sepg.pap.hacienda.gob.es/sitios/sepg/es-ES/Presupuestos/DocumentacionEstadisticas/Estadisticas/Documents/2025-P/01%20Presupuestos%20Generales%20del%20Estado%20Consolidados.pdf
Ministry of Finance (2026b) “Statistics 2017 -2025 Extended Budget of the State 2026”, January. https://www.sepg.pap.hacienda.gob.es/sitios/sepg/es-ES/Presupuestos/DocumentacionEstadisticas/Estadisticas/Documents/2025-P/02%20Presupuestos%20del%20Estado.pdf
Court of Auditors (2026) “General Account of the State 2024 approved”, 5 May. https://tcu.es/es/Comunicacion-y-Espacio-Divulgativo/Aprobada-la-Declaracion-de-la-Cuenta-General-del-Estado-2024/
Polo, Clemente (2023) “GDP is no longer what it seems”, Consejeros, January. https://consejeros.es/macroeconomia/c/el-pib-ya-no-es-lo-que-parece/
Polo, Clemente (2026a) “How much I will miss her”, El Liberal.cat, 29 March. https://www.elliberal.cat/2026/03/29/critica-gestion-maria-jesus-montero-deuda-deficit/
Polo, Clemente (2026b) “Well gone and badly arrived”, El Liberal.cat, 4 April. https://www.elliberal.cat/2026/04/05/bien-ida-y-mal-llegado/
