Spain to miss bud­get

The Myanmar Times - - International Business -

SPAIN, mired in po­lit­i­cal dead­lock just as it emerges from a six-year re­ces­sion, has ad­mit­ted it will over­shoot its 2017 bud­get deficit tar­get.

The fi­nance min­istry said it in­formed the Euro­pean Com­mis­sion that it pro­vi­sion­ally fore­cast its bud­get deficit at 3.6 per­cent of gross do­mes­tic prod­uct (GDP) from a pre­vi­ous 3.1pc tar­get.

It noted a back­drop of po­lit­i­cal in­sta­bil­ity af­ter two in­con­clu­sive elec­tions in­side a year and eight years try­ing to haul it­self back into shape fol­low­ing the 2008 eco­nomic cri­sis.

Two months ago, Madrid just avoided an EU fine for re­peated breaches of bud­get rules.

Brus­sels let both Spain and neigh­bour­ing Por­tu­gal off the hook, judg­ing that both were try­ing to get their house in order and close in on the of­fi­cial ceil­ing of 3.0 per­cent of GDP.

But the EU told both coun­tries to stay on a path of “fis­cal con­sol­i­da­tion” as the only way to cre­ate a foun­da­tion for durable growth.

Brus­sels did not im­me­di­ately com­ment on the lat­est fore­cast for the eu­ro­zone’s fourth-largest econ­omy.

Af­ter six years in re­ces­sion, Spain re­ported a 2015 bud­get deficit of 5.1pc of GDP, way off the 4.2pc tar­get set by the Com­mis­sion.

For this year, Madrid must pare the deficit to 4.6pc, and then 3.1pc in 2017 – which it will now miss – then 2.2pc in 2018.

The bud­get re­port recog­nises that gov­ern­ment plans to bol­ster rev­enue, in­clud­ing tax hikes for com­pa­nies which it hopes can net 8 bil­lion eu­ros (US$9 bil­lion), will not suf­fice.

Growth is also fray­ing with the gov­ern­ment now fore­cast­ing 2.9pc for this year – down from 3.2pc. The gov­ern­ment is stick­ing with the pre­dic­tion of 2.3pc for 2017. –

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