Spain posts lower than expected budget deficit

Madrid, Jan 26 (IANS/EFE) The Spanish government ran a budget deficit equal to 5.1 percent of gross domestic product in 2010, better than the official forecast of 5.9 percent of GDP, a minister said.

Spain “comfortably” met the goal of keeping the cumulative 2010 deficit of the national, regional and municipal administrations at no more than 9.3 percent of GDP, Economy and Finance Minister Elena Salgado said Tuesday.

The smaller than expected shortfall at the national level, 54.4 billion euros ($74.2 billion) created a cushion of about 8 billion euros ($10.9 billion) to compensate for any excess by the regional or local governments, according to Salgado.

Officials credit austerity measures and a 46 percent increase in revenue from value added tax for reducing the deficit by nearly half from 2009 to 2010.

Spain vows to bring its budget deficit to within 3 percent of GDP in 2013, in accord with European Union policy.

While the governments of Spain’s autonomous regions have considerable control over their own spending, Madrid has established “clear norms” for the regional administrations and will ensure that they comply, Salgado said.

In its latest economic outlook, released Tuesday, the International Monetary Fund says the Spanish economy is likely to grow 0.6 percent this year and 1.5 percent in 2012, compared with Madrid’s own projection of 1.3 percent in 2011 and 2.5 percent next year.

Prime Minister Jose Luis Rodriguez Zapatero’s government says it “does not share” the IMF’s “pessimistic” view and that it has no plans to revise its economic forecast.

Spain has an unemployment rate of around 20 percent, the highest in the 27-member EU.

–IANS/EFE