New Spanish deficit target 'reasonable and achievable': PM
(MADRID) - Spain's new 2012 deficit target of 5.3 percent of output agreed with the European Union is "reasonable and achievable", Prime Minister Mariano Rajoy said on Wednesday.
Rajoy said Madrid would "scrupulously" respect its 2013 deficit target of 3.0 percent agreed with Brussels.
Spain was supposed to bring its deficit down to 4.4 percent of output this year, but last month Rajoy month said that Madrid would aim for a deficit of 5.8 percent instead.
The higher figure arose in part from a sharp increase in the estimated deficit for last year, setting a higher base level, but the European Commission responded by insisting at the time that Spain must meet its targets.
On Monday, the two sides agreed that Spain must cut the deficit to 5.3 percent of gross domestic product in 2012 and to the EU ceiling of 3.0 percent in 2013 -- still a major challenge for the next two years.
"What is important is that we have accepted changing the previous goal of 4.4 percent set in 2009 and ratified in 2011 for a more reasonable and achievable target of 5.3 percent," he said during a debate in parliament.
"Since we must always maintain the maximum level of cordination and consensus with our European partners, we decided to accept this approach.
"The solidity of our arguments was recognised even if we are asked to make a stronger effort this year," he added.
Rajoy's government, in power since December, had argued that the 2012 deficit target set by its Socialist predecessors needed to be changed to reflect new economic realities, with Spain now forecast to return to recession this year with a contraction of 1.7 percent.
The new deficit targets oblige Spain to make an extra 5.0 billion euros ($6.5 billion) of savings this year
Rajoy's conservative government said shortly after it came to power in December that the 2011 public deficit would be about 8.0 percent of GDP, far above the 6.0-percent agreed with Brussels by Spain's previous socialist government.
It has announced spending cuts of 8.9 billion euros and frozen public sector wages and increased taxes on income, savings and property to bring in 6.3 billion euros, as part of efforts to rein in the deficit.
Rajoy has already vowed to implement further measures to cur the deficit as his government races to make sure the country does not get dragged into the debt crisis which has already forced Greece, Ireland and Portugal to seek financial bailouts.
Spain is to present its 2012 budget by the end of March. It is currently operating on an extension of the 2011 budget.
"All levels of government must make an effort in this direction but we have decided that the additional adjustment of 0.5 percentage points required in 2012 will be assumed entirely by the central government," he added.
Spain's central government deficit widened in January to 9.04 billion euros from 7.71 billion euros during the same year-ago period due to lower tax revenues, the finance ministry said Tuesday.
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