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Spain's budget deficit isn't as bad as first thought
Photo: AFP

Spain's budget deficit isn't as bad as first thought

AFP · 7 Apr 2016, 15:10

Published: 07 Apr 2016 15:10 GMT+02:00
Updated: 07 Apr 2016 15:10 GMT+02:00

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The deficit now stands at 5.0 percent of gross domestic product (GDP), a little lower than the 5.16 percent it posted last week.

This makes 2015 the eighth consecutive year Spain has overshot its fiscal target.

"We will modify the closure of the accounts due to a change regarding the calculation of the budgetary consequences of the use of radio frequency space," Montoro told a parliamentary commission.

The change means Spain's public deficit was €1.6 billion ($1.8 billion) smaller than was previously thought, he added.

Even with the revision the deficit is still far higher than the target of 4.2 percent of GDP set by Spain's conservative government last year.

Montoro was appearing before a parliamentary commission to explain why the government missed its target, with left-wing lawmakers accusing it of having lied about Spain's fiscal position ahead of a December 20th general election.

The government brought forward a income tax reduction plan and partially reinstated an annual Christmas bonus paid to public workers before the election, arguing Spain's improved circumstances made it possible.

"A massive deception and a repeated lie," Socialist lawmaker Pedro Saura told the commission.

Spain also predicted the public deficit would fall to 2.8 percent of output in 2016, below the limit of 3.0 percent demanded by Brussels for nations that use the euro single currency.

European Union finance commissioner Pierre Moscovici warned the forecast was "a bit optimistic" and has repeatedly urged Spain to adopt additional measures to rein in its public deficit.

The European Commission forecast Spain would post a public deficit of 4.7 percent of economic output in 2015 and of 3.6 percent in 2016.

Story continues below…

Spain posted a public deficit of 5.8 percent of economic output in 2014.   

Montoro recalled that the deficit stood at 9.3 percent of output in 2011, a year before his conservative Popular Party (PP) was swept to power, and that his adminstration has managed to bring it down.

Spain has been without a proper government since the election, which produced a hung parliament divided among four main parties, none of them with enough seats to govern alone.

The PP won the most votes but lost its absolute majority in parliament.

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