MADRID Nov 25 Spain was on track to meet its
2013 public deficit target as of the end of September, Treasury
Ministry figures showed on Monday, in the latest sign that one
of Europe's biggest funding gaps may eventually be coming under
The public deficit stood at 4.8 percent of gross domestic
product at the end of September, Treasury Secretary Marta
Fernandez Curras said, unchanged from August and holding below a
full-year target of 6.5 percent.
The figure includes the central government, social security
and Spain's 17 regional governments, but not city halls.
Spain emerged from a two-year recession in the third
quarter, and its borrowing costs have fallen to record lows,
showing it has come a long way from its unsustainably high
financing costs last summer, when most investors expected the
government to seek sovereign aid.
The big fall in its borrowing costs began after European
Central Bank President Mario Draghi pledged last summer to do
"whatever it takes" to save the euro.
"When I spoke before you this time last year, Spain's
economy was passing through a very difficult and uncertain
stage," Bank of Spain Governor Luis Maria Linde told Senators in
the upper house of Parliament on Monday.
"Since then, there's been a notable improvement and signs it
is overcoming the second recession in this prolonged crisis," he
said. But he added that there was still a risk the deficit goal
could be overshot as the recovery remains weak.
Spain's economic upturn prompted debt-rating agency Fitch to
upgrade its outlook to stable from negative at the beginning of
November, citing progress on the deficit and the
sooner-than-expected return to growth.
Treasury Minister Cristobal Montoro told Reuters last week
that economic growth and a widening of the country's taxable
base would help it bring its deficit below the European ceiling
of 3 percent of gross domestic product without the need for more
The Spanish upturn contrasts with growing concerns over its
northern neighbour France, where President Francois Hollande,
whose popularity is sliding, is struggling to push through
reforms to promote growth and cut France's deficit.
S&P cut France's sovereign credit rating by one notch on
November 8, saying Hollande's reforms were not enough to turn
around the euro zone's second-biggest economy.
Hollande is due to meet Spanish Prime Minister Mariano Rajoy
in Madrid on Wednesday.