Spain hints could miss year-end deficit target

MADRID Wed Dec 5, 2012 2:07am IST

Flags of Catalunya (L-R), Spain and EU wave near Barcelona November 15, 2012. REUTERS/Albert Gea

Flags of Catalunya (L-R), Spain and EU wave near Barcelona November 15, 2012.

Credit: Reuters/Albert Gea

Related Topics

MADRID (Reuters) - Spain softened on Tuesday its insistence it would meet its year-end deficit target of 6.3 percent of Gross Domestic Product and said "good" reductions in spending by regional governments did not guarantee the objective would be achieved.

At a news conference in Madrid, Treasury Minister Cristobal Montoro declined twice to confirm Spain would meet the European Union-agreed target and instead referred to the European Commission forecast of a budget gap of 7.0 percent of economic output.

"The formal target remains the same and the European Commissioner for Economic and Monetary Affairs, when he assessed the measures taken by the government said Spain's deficit could be around 7 percent of GDP," Montoro said.

"What is really important is to reduce the deficit. The quicker the better but without deepening the recession... We shouldn't focus too much on this magic figure of 6.3 (percent of GDP)," he added.

Some analysts fear local finances and higher social security costs could push Spain over its 6.3 percent deficit target.

The central government has said it would not make an end-of-year review to adjust pensions to inflation since its deficit target was the top priority. On Sunday, Prime Minister Mariano Rajoy said the target would be hard to meet.

Economy Minister Luis de Guindos said on Tuesday the economy was set in the last three months of 2012 to register its worst performance since the start of the current recession.

Spain's 17 autonomous regions had a public deficit of 0.93 percent of GDP at the end of September, compared to a year-end target of 1.5 percent, the treasury ministry said on Tuesday.

Stripped of extraordinary items, such as early transfers of funds from the central government, the figure came to 1.14 percent of GDP, the ministry said.

"Do these good figures guarantee the 1.5 percent target will be met? No, there is no guarantee. We should not relax," Montoro said, adding the progress made showed the target was feasible.

Seven regions, including Catalonia or Andalucia are not on track to meet their year-end target. The central government has a target of 4.5 percent of GDP, including the cost of funding the social security system.

Its deficit was 4.13 percent of GDP in the January-October period but that does not include the social security system, which is set to register a deficit of 1 percent of GDP according to a document sent to the European Commission in October.

(Reporting by Feliciano Tisera, writing by Julien Toyer; Editing by Sarah Morris and Michael Roddy)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Earnings Season

Earnings Season

Reliance Q4 sales rise, refining margin narrows.  Read 

Innovative Solution

Innovative Solution

Turning smog into jewels - a Dutch designer's solution to Beijing's pollution.  Video 

Insider Trading

Insider Trading

Rajaratnam's brother loses bid to dismiss insider trading charges.  Full Article 

Literary Giant Dies

Literary Giant Dies

Mourning and memories in Gabriel Garcia Marquez's languid hometown.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage