By Carlos Ruano
MADRID Oct 4 Spain's central bank head cast
doubt on the government's 2013 budget and deficit cutting plans
on Thursday, saying they were based on a too-rosy outlook for
the economy and tax revenue.
Central Bank Governor Luis Maria Linde, in his job since
June, said most independent forecasts are for a 1.5 percent
economic contraction in Spain next year, rather than the 0.5
percent projection in the budget.
He said the government should consider additional measures
in order to meet the deficit target.
"This outlook, a fall of 0.5 percent in gross domestic
product in 2013, is certainly optimistic in comparison with the
outlook shared by the majority of international organisations
and analysts, which is around a 1.5 percent fall," Linde said in
a speech to a parliamentary budget committee.
Prime Minister Mariano Rajoy sent to parliament on Saturday
a tough budget with 13 billion euros in savings -- from spending
cuts and tax increases -- which it said would put Spain on track
to cutting its public deficit to 4.5 percent of gross domestic
product next year.
Spain is the current focus of the euro zone debt crisis,
with expectation mounting that the government will soon seek
European aid to keep its borrowing costs under control
A recession has cut into tax revenue and also pushed up
unemployment benefit costs. Also, as the country's borrowing
costs rise, much of the savings from aggressive cost-cutting
have gone to servicing debt.
The government is also taking on additional debt - some of
it from European rescue funds - to bailout troubled banks and
cash-strapped regional governments.
Linde said the government should make a prudent forecast for
tax revenue next year and said the tax-take outlook in the 2013
budget was subject to downside risks.
"The revenue outlook for 2013 is subject to downward
slippage risks... If this risk materializes, and is not
counteracted through adequate actions in the rest of 2012, this
means it will be difficult to reach the 2013 objectives, and
added to what is budgeted."