MADRID Dec 4 Spain softened on Tuesday its
insistence it would meet its year-end deficit target of 6.3
percent of Gross Domestic Product and said "good" reductions in
spending by regional governments did not guarantee the objective
would be achieved.
At a news conference in Madrid, Treasury Minister Cristobal
Montoro declined twice to confirm Spain would meet the European
Union-agreed target and instead referred to the European
Commission forecast of a budget gap of 7.0 percent of economic
"The formal target remains the same and the European
Commissioner for Economic and Monetary Affairs, when he assessed
the measures taken by the government said Spain's deficit could
be around 7 percent of GDP," Montoro said.
"What is really important is to reduce the deficit. The
quicker the better but without deepening the recession... We
shouldn't focus too much on this magic figure of 6.3 (percent of
GDP)," he added.
Some analysts fear local finances and higher social security
costs could push Spain over its 6.3 percent deficit target.
The central government has said it would not make an
end-of-year review to adjust pensions to inflation since its
deficit target was the top priority. On Sunday, Prime Minister
Mariano Rajoy said the target would be hard to meet.
Economy Minister Luis de Guindos said on Tuesday the economy
was set in the last three months of 2012 to register its worst
performance since the start of the current recession.
Spain's 17 autonomous regions had a public deficit of 0.93
percent of GDP at the end of September, compared to a year-end
target of 1.5 percent, the treasury ministry said on Tuesday.
Stripped of extraordinary items, such as early transfers of
funds from the central government, the figure came to 1.14
percent of GDP, the ministry said.
"Do these good figures guarantee the 1.5 percent target will
be met? No, there is no guarantee. We should not relax," Montoro
said, adding the progress made showed the target was feasible.
Seven regions, including Catalonia or Andalucia are not on
track to meet their year-end target. The central government has
a target of 4.5 percent of GDP, including the cost of funding
the social security system.
Its deficit was 4.13 percent of GDP in the January-October
period but that does not include the social security system,
which is set to register a deficit of 1 percent of GDP according
to a document sent to the European Commission in October.