Spain's acting PM may ask EU for leeway in reducing deficit

(MADRID) - Spain's acting Prime Minister Mariano Rajoy indicated Thursday he may be willing to ask Brussels for leeway in reducing the country's deficit, following EU scepticism over his government's "optimistic" targets.

Rajoy's conservative government predicted last year that it would reduce its deficit to 4.2 percent in 2015 and then to 2.8 percent in 2016 -- forecasts that EU finance commissioner Pierre Moscovici said were "a bit optimistic".

The EU forecast that Spain would actually overshoot the official limit for deficits -- which is 3.0 percent of gross domestic product -- in 2015 and 2016, prompting it to ask Spain to submit a new draft budget with lower estimates.

"Spain must meet the path of budgetary stability agreed with the European Union, but we can also make use of the flexibility allowed by European regulations," Rajoy told reporters as he presented his programme for the country following inconclusive December elections.

But the chances that Rajoy continues to lead Spain are slim following elections that resulted in a parliament fractured along four main groupings -- none of which have enough seats to govern alone.

Rajoy's Popular Party won the polls but without an absolute majority, and he has failed to get the support he needs from other parties to form a coalition government.

The result has been nearly eight weeks of political limbo during which he has continued to lead the country as acting prime minister.

He said Thursday his government had managed to reduce the deficit from the 9.1 percent he inherited to 4.5 percent, though it was unclear whether the last figure was that of 2015, which has not yet been officially announced.

"I'm absolutely convinced that the European Union will act with flexibility and intelligence with those countries that have the will to achieve budgetary stability, which are taken seriously and have been able to reduce the deficit," he said.