The European Commission has decided to launch a formal investigation into the possible manipulation of statistics in the region of Valencia (Comunidad Valenciana), Spain. The Commission is not calling into the question the accuracy of statistics in Spain.
The investigation will examine whether deliberate or seriously negligent misreporting of expenditure in the region caused Spain's national debt and deficit data to be misrepresented over several years. This is the first time that the Commission draws on its new powers under the "Six Pack" economic governance legislation (IP/10/1199) to investigate suspected manipulation of a Member State's debt and deficit data. If manipulation is confirmed, the Commission may apply appropriate sanctions. The opening of an investigation, however, does not prejudge the outcome.
Algirdas Šemeta, Commissioner responsible for statistics, said: "The quality and credibility of European statistics is not something that the Commission is willing to compromise on. We depend on sound data to make sound decisions, and reliable statistics for evidence-based policy making. The Commission will use every tool at its disposal to ensure that Member States' statistics truly reflect the economic situation and are compiled and reported in line with EU law."
In May 2012, the Spanish national statistical authorities informed Eurostat that its general government deficit for 2011 would have to be revised upwards by 0.4% of GDP, compared to the figure it reported for the EDP notification a few weeks earlier. This was mainly due to the discovery of unrecorded expenditures in the Autonomous Communities of Valencia and Madrid. Eurostat immediately carried out technical visits to Spain to determine the nature of the problem. During these visits, Eurostat found that the case of Madrid could be considered as an exceptional adjustment. However, the case of Valencia gave reason for concern. It appeared that the Intervención General de la Generalidad Valenciana (IGGV) had systematically sent incorrect information to the national statistical authorities over many years. As well as failing to report considerable health expenditure, the IGGV had not respected the accrual principle, required under national and EU law. Moreover, reports by the Regional Court of Auditors, flagging these problems, and comments of the Regional Ministry of Health, seemed to have been ignored.
Following these visits, Eurostat issued a report with detailed recommendations to ensure the quality of statistical reporting by the regional and local authorities. Eurostat worked with the Spanish authorities in the implementation of these recommendations, and continues to monitor the situation closely. The correction to the Spanish general government deficit was reflected in the October 2012 EDP notification. It is important to underline that Spanish data has always been published without reservation by Eurostat. In September 2013, Eurostat conducted a verification visit to Spain to confirm its findings related to the incorrect reporting in Valencia. On the basis of these visits, and further analysis of the situation, Eurostat recommended that the Commission open an investigation into the misrepresentation of EDP data in Spain.
Economic Governance and Statistics
Member States are obliged to report their annual deficit and debt data to Eurostat twice a year, in full compliance with European statistical rules and procedures (ESA 95).
Since November 2011, the Commission can launch an investigation if there are suspicions of manipulation of statistics due to "deliberate misreporting" or "serious negligence". Regulation 1173/2011 puts in place investigation procedures and allows financial sanctions (up to 0.2% of GDP) in the case of manipulation of statistics. This is an important part of reinforcing economic governance and surveillance and of ensuring that Member States' general government data is credible, reliable and independently produced.