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Spain Adopts Budget Stability Objective

by Ulrika Lomas,, Brussels

26 July 2012

Spain’s Council of Ministers has recently adopted a budgetary stability objective for next year, together with a ceiling for non-financial state expenditure, in strict accordance with the provisions contained in the country’s budgetary stability law.

According to the Spanish finance ministry, the government is continuing its efforts to reduce the deficit and to meet its European commitments, to lay the foundations for balanced economic growth, for example by cutting ministerial spending by 12.2% in 2013.

The ministry explains that following the revision of the deficit target for 2011 to 8.9% of gross domestic product (GDP) compared with the 6% of GDP initially forecast, the government now plans to regain the path of fiscal consolidation to achieve the new public deficit targets of 6.3% of GDP for this year (instead of 5.3%) and 4.5% next year.

The general government deficit ceiling has been fixed at 2.8% of GDP in 2014 and 1.9% of GDP in 2015, the ministry adds.

Spain’s Council of Ministers also approved the revised macroeconomic framework for 2012-2015, to support the new spending ceiling. In the revised forecast, this year appears to be the worst of the crisis, especially in terms of growth and employment. After 2012, a slight improvement is expected to enable the Spanish economy to gradually recover its growth path in 2014. Next year annual growth is predicted at 0.5%.

The finance ministry emphasizes that the recent labour reform will improve the relationship between growth and employment, noting that at the same time efforts to clean up the financial sector, to contain the budget deficit and to implement economic liberalization measures will provide the basis for strong and sustainable growth.

TAGS: tax | economics | fiscal policy | law | gross domestic product (GDP) | budget | Spain

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