Spain nar­rows cen­tral govt bud­get deficit to 4.39pc

The Pak Banker - - Front Page -

MADRID

Spain’s cen­tral gov­ern­ment bud­get deficit nar­rowed in Septem­ber as a sales-tax in­crease buoyed gov­ern­ment rev­enue, boost­ing Prime Min­is­ter Mar­i­ano Ra­joy’s cam­paign to re­sist ask­ing for a sov­er­eign bailout.

The cen­tral gov­ern­ment’s deficit was 4.39 per­cent of gross do­mes­tic prod­uct in the nine months through Septem­ber, com­pared with 4.77 per­cent in the eight months through Au­gust. Value- added tax re­ceipts surged 11.9 per­cent in Septem­ber from a year ear­lier as an in­crease came into ef­fect, Deputy Bud­get Min­is­ter Marta Fer­nan­dez Cur­ras told re­porters in Madrid.

Prime Min­is­ter Mar­i­ano Ra­joy, whose pop­u­lar­ity has slumped as bud­get cuts deepen the re­ces­sion while fail­ing to tame bor­row­ing costs, said yes­ter­day he would trig­ger the bailout mech­a­nism when it was in Spa­niards’ best in­ter­ests, and such a move isn’t “in­dis­pens­able” at the mo­ment. “All these developments and read-outs al­low us to be op­ti­mistic about reach­ing our bud­get ob­jec­tives,” Cur­ras said. “The cen­tral gov­ern­ment deficit is un­der con­trol.”

Even as the gov­ern­ment says the cen­tral gov­ern­ment’s bal­ance is within tar­get, Ra­joy is strug­gling to con­trol re­gional spend­ing and a swelling so­cial-se­cu­rity short­fall. The prime min­is­ter, seek­ing to de­liver on his Euro­pean com­mit­ment of lim­it­ing the over­all pub­lic sec­tor deficit to 6.3 per­cent of GDP this year, is fac­ing mount­ing pres­sure to trig­ger the Euro­pean Cen­tral Bank’s bond-buy­ing pro­gram by sign­ing up to a Euro­pean res­cue pack­age.

The gov­ern­ment needs to raise 60 bil­lion eu­ros ($78 bil­lion) in debt and eq­uity to fund a bad bank that it an­nounced this week and Cur­ras said the ad­min­is­tra­tion also is weigh­ing a bailout for toll-road op­er­a­tors that are strug­gling to meet re­pay­ments on 4 bil­lion eu­ros of project loans.

The state al­ready bailed out banks, the power in­dus­try, the re­gions and the con­struc­tion in­dus­try, twice, as pri­vate sec­tor losses tum­ble onto the gov­ern­ment’s books amid the coun­try’s worst fi­nan­cial cri­sis in more than half a cen­tury.

Even so, the cen­tral gov­ern­ment’s 2012 deficit will be smaller than of­fi­cials fore­cast as aus­ter­ity mea­sures kick in dur­ing the fi­nal quar­ter boost­ing rev­enue, Cur­ras said. She said that the state’s deficit will be less than 4 per­cent of gross do­mes­tic prod­uct, off­set­ting any de­vi­a­tion from the pro­jected short­fall in the socialsecurity sys­tem.

Spain’s econ­omy con­tracted for a fifth quar­ter be­tween July and Septem­ber as un­em­ployed rose to a record 25 per­cent adding ex­tra pay­ments for those out of work. Gamesa Corp. Tec­no­log­ica SA (GAM) and Iber­drola SA (IBE) an­nounced they are cut­ting 3,800 jobs as they bat­tle fall­ing power de­mand in Spain and a slump in ex­ports of wind tur­bines.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.