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Spain regions to miss deficit goal: study
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MADRID: Spain’s regions will exceed their deficit target this year, an economic study warned on Friday, complicating efforts by the central government to repair its finances and avoid a bailout.
The government has promised to cut Spain’s overall deficit from 8.5 percent of output in 2011 to 5.3 percent this year and 3.0 percent next year, requiring a big effort by the 17 regional administrations that control key budgets.
The regions are blamed for much of the overshoot last year and the government has ordered them to cut their deficit the shortfall of revenue to spending from 2.94 percent of gross domestic product to 1.5 percent in 2012.
But the economics foundation FEDEA warned on Friday that, based on the budget plans presented by the regions, “the year 2012 will end with a deficit of 2.2 percent of GDP, an excess of 0.7 percentage points over the new target”.
It forecast that all the regions will exceed the target except three: Madrid with a 0.8 percent deficit, Rioja in the north with 1.0 percent and Galicia in the northwest with 1.1 percent.
Among the regions with the highest deficits will be Castilla-La Mancha with 4.9 percent, Murcia with 3.7 percent, Balearic Islands with 3.4 percent and Valencia with 3.3 percent.
Spain’s deficit is a major concern for its European neighbours and financial markets. Economists have not ruled out that Spain might need to be bailed out by international lenders.
The conservative national government has presented tens of billions of euros in spending cuts and other money-saving measures, prompting mass street protests.
It has threatened to seize control of public budgets from the regions, which are responsible for education and health spending, if they do not cut their deficits.
“The data presented in this report can be improved with new measures and readjustment plans,” the foundation said, however.
“The reputation of our fiscal consolidation must not let the regions miss their targets,” it added.
“The government must do all it can to discipline them, including drastic measures to intervene in a region if necessary.”
Copyright AFP (Agence France-Presse), 2012Comments
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