SANTIAGO Dec 7 Spain could miss its budget
deficit target this year, Bank of Spain governor Luis Maria
Linde said on Friday, just a week after the government announced
it would hold pension payments flat to curb outlays.
The year-end deficit target stands at 6.3 percent of gross
domestic product (GDP). But the country's treasury minister
hinted earlier this week that the deficit could end up topping
"The objective is 6.3 but it could be (above that)," Linde
told Reuters on the sidelines of a seminar in Santiago, Chile.
"It's not completely assured that it will be 6.3."
Hit by a slump that has left one in four people out of work,
Spain is battling to rebalance its economy and get its debt
down, but borrowing costs remain uncomfortably high for a
country facing another year without economic growth.
Some analysts fear local finances and higher social security
costs could push this year's budget deficit over the 6.3 percent
mark. On Sunday, Prime Minister Mariano Rajoy said the target
would be hard to meet.
His center-right government broke a campaign pledge by
saying it will not make its usual end-of-year review to adjust
pensions for 2012 inflation. Authorities said meeting the
deficit target was their top priority.
Ministers had been divided on whether to touch the pensions
because of the blow to Spain's 9 million retired people, a
source close to the government told Reuters.
But by doing so, Spain will please its European Union
partners and the European Central Bank, which is opposed to
inflation-linked reviews of pensions and wages.
Separately, a European Central Bank policymaker said on
Friday the bank had a "very serious" debate about cutting
interest rates this week and that a cut was possible next year
if the euro zone economy does not pick up.
Speaking on the possibility of an interest rate cut by the
ECB, Linde said: "That could be, but I have no way of knowing at