Rise of Empires: Spain.

Chapter 98 Revenue and Budget

Regarding the government's development report, Carlo is actually more interested in the Spanish government's financial report.

After all, whether it is reform or construction, a lot of pesetas are needed. If you don't pay attention to the government's financial situation, you may not know when the country will go bankrupt.

Prime Minister Primo actually has a lot to say about the government's financial situation.

"Your Majesty, according to the 1870 financial report compiled by the Ministry of Finance, our economic situation is relatively good and is expected to maintain relatively stable growth in 1871." Prime Minister Primo smiled and seemed to relax a little when he mentioned the economic situation in Spain.

Economic development is always a chain reaction. Although it seems that the government has reduced taxes on farmers, once farmers have money, whether they deposit it in the bank or spend it, it can also stimulate Spain's fiscal growth.

In addition, with the various construction projects in Spain, many jobs with per capita income levels have been created, which has been welcomed by many Spaniards.

The most popular workers at the moment are the workers in the steel mills. Although the work in the steel mills is hard, they can really make money.

If nothing else, the integrated steel mill in Carlo alone employed more than 1870 workers in 400, and there would be even more across Spain.

As people become richer, their consumption level will naturally increase steadily. People's consumption can also stimulate the development of various industries, and Spain's economy will naturally rise.

If Spain during the reign of Queen Isabel was more like a pool of stagnant and turbid water, then Spain today is more like living water connected to rivers, because the various construction projects advocated by the government and the royal family are gradually revitalizing the entire economic system.

Carlo nodded, looking like he was listening attentively.

The royal family alone made a lot of money during this period, and the government's fiscal revenue should have increased significantly. After all, the royal family has become a major taxpayer of the government so far, paying taxes of up to one million pesetas to the government in 1870.

“According to incomplete statistics, our country’s gross national product in 1870 was approximately 61.828 billion pesetas, an increase of about 1869% compared to 1.5.

The fiscal revenue was about 3.5248 million pesetas, accounting for about 5.7% of the GDP. Our fiscal expenditure reached 4.128 million pesetas, and the fiscal deficit was as high as 6000 million pesetas.

However, because we issued national debt and received war reparations from Morocco, we were able to make up for our fiscal deficit." Prime Minister Primo handed Carlo a detailed report on Spain's finances and explained.

It is also the king's due right to understand the country's development. Primo would naturally not refuse Carlo's understanding of the country's situation. After all, a king who is indifferent to state affairs is not a good thing.

"A fiscal deficit of 6000 million pesetas?" Carlo had a headache. Carlo was in a good mood when he heard that Spain's total fiscal revenue was as high as 3.5248 million pesetas.

But after hearing that the fiscal deficit in 1870 alone was as high as 6000 million pesetas, Carlo's mood was not very good again.

6000 million pesetas! Converted into pounds, it is nearly 230 million. This is definitely a huge sum of money.

"Where did the 6000 million pesetas go?" Carlo asked hurriedly.

All kidding aside, the total assets of the royal family have not yet exceeded 6000 million pesetas. Even the total savings of the Royal United Bank barely reach this figure.

The Spanish government’s fiscal deficit is as high as 6000 million pesetas a year. Doesn’t this mean that in just one year the government’s losses will be equivalent to the total assets of the royal family?

Primo had anticipated Carlo's question. He was not panicked at all when he heard the question. He smiled and explained: "Your Majesty, our major expenses are currently divided into three items. The first is military expenditure, which accounts for 25.1% of the total fiscal expenditure. About 1.036 million pesetas are spent on military expenditure every year.

The remaining two items are railway construction and industrial construction.

In 1870, we built more than 500 kilometers of railways and 4000 kilometers of roads. The construction cost of these railways and roads is also one of our major expenses.

Expenditure in the transport sector is also as high as 23%, and our expenses in transport construction amount to 9500 million pesetas.

Although industrial construction was not so exaggerated, our spending on purchasing means of production from abroad, building industrial bases and encouraging private enterprises was also as high as 7000 million pesetas.

Taking into account other expenses such as education, health care, and government employees' salaries, 4.128 million pesetas is the result of the government's many rounds of austerity."

If Spain wants to achieve reform and industrial expansion, it will be impossible to achieve it without investing huge amounts of money.

Spain's industrial technology is already backward, and it needs to purchase a large amount of industrial equipment and related scientific and technological information from abroad. At the same time, building factories, laying production lines and recruiting workers all cost money, which is also the reason why the Spanish government's fiscal expenditure remains high.

But all this is paying off. At least in Primo's view, these expenditures are expected to bear fruit in the next three years and have an impact on Spain's economic development.

The various factories and enterprises that have continued to blossom in Spain during this period alone are destined to usher in a period of stable growth in the Spanish economy in the future.

This is also the reason why Primo is willing to spend such a huge amount of money on the government, because there will be rewards for every effort, and the funds spent will continue to return to the government in various ways and will also allow the government to earn more in the future.

After hearing Prime Minister Primo's reply, Carlo nodded, and his doubts were dispelled.

Although Spain did not have a large navy, it also spent a lot on military expenditures, especially in 1870, when it experienced the Cuban War of Independence and the Carlos Rebellion, both of which cost a lot of military expenditures.

In addition, the Spanish government needs to maintain an army of more than 100,000 people, so military expenditure is actually not much and is already within a reasonable range.

Fortunately, the indemnity from Morocco allowed Spain to basically offset its fiscal losses in 1870.

Coupled with the loan from the Italian government and the total fiscal revenue for the whole year of 1871, the subsequent Spanish government will still be confident in dealing with new construction and expenditure.

Ultimately, it was because of the independence activists in Cuba and the Philippines that Spain was forced to maintain an army of more than 100,000 people.

After all, these two regions not only love independence, but are also very far away from the Spanish mainland. Every time the rebellion is suppressed, the government has to pay a heavy price. No matter what the final outcome of the war is, it is actually a loss for the Spanish government.

Carlo nodded and continued to ask his own question: "Is the available fiscal budget for next year sufficient? If next year's fiscal deficit is still huge, I'm afraid no one will come to help us fill the gap."

Prime Minister Primo has actually already considered this issue: "The government's available fiscal budget is close to 1.5 million pesetas, plus next year's fiscal revenue, so there will be no problem in continuing our construction.

There is hope that 1871 will be a peaceful year, and if there is no war, our military expenditure should be reduced to about 7500 pesetas.

The reduced military spending can be used for railway and highway construction or industrial expansion, or to continue popularizing literacy education, which is basically enough to meet the government's financial needs in the new year."

Although Spain's fiscal revenue is as high as 3.5248 million pesetas, in fact, many of the government's expenditures are fixed and there is basically no way to reduce them.

This is why Prime Minister Primo needs to be careful with millions of pesetas. If a project spends a few million more pesetas, the wasted funds added up for dozens of construction projects will be enough to bring down the Spanish government.

"Prime Minister Primo, since our fiscal budget is sufficient, the government's focus in the new year should continue to be on the construction of heavy industry, as well as broader literacy education and infrastructure including railways and highways. What do you think?" Carlo intends to offer his opinions on the use of the new year's fiscal budget.

The fiscal revenue of 3.5248 million pesetas may seem like a lot, but when converted into US dollars it is only about 6521 million US dollars, and when converted into British pounds it is only 1353.1 million pounds.

If this amount of money is only used for a few key projects, it may be able to achieve certain results. However, if you want to build a comprehensive and multi-faceted project, it is a bit too idealistic.

Carlo's goal was very simple, to influence the government to focus on the construction of heavy industry as much as possible. The secondary goal was literacy education and infrastructure construction, and everything else could be put on hold for the time being.

There is not much room for development in areas like healthcare and agriculture. Spain's land situation means that the upper limit of agriculture is limited. It is difficult to achieve self-sufficiency, let alone export agricultural products on a large scale.

Medical care is completely limited by current technology. If you invest money in medical care, you may not be able to get your money back in ten years.

For the Spanish government, which is short of funds, these two projects can be temporarily abandoned for now, and attention should be focused on more profitable heavy industry.

Carlo certainly has the power to make suggestions on some of the government's work. Prime Minister Primo does not object to Carlo's suggestions, he just doesn't want Carlo to interfere too much in the government's work and impose his own ideas on the government to implement.

"Your idea is the same as mine, Your Majesty." Primo nodded, obviously agreeing with Carlo's idea: "For Spain now, the development of agriculture and medical care can be postponed for a while.

At present, the government’s focus will be on the construction of heavy industry and railways, and it will also do its best to promote the popularization of literacy education.

Until Spain has enough money in its budget, other construction projects can be put on hold. Currently, only heavy industry, education and infrastructure are the most important to us.”

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(End of this chapter)