Spain's debt will be 1pc of GNP

19th July 2004, Comments 0 comments

19 July 2004, MADRID – Spain's debt will be 1 percent of the country's GNP this year, the Economy Minister said Monday.

19 July 2004

MADRID – Spain's debt will be 1 percent of the country's GNP this year, the Economy Minister said Monday.

Pedro Solbes said that the debt for 2004 had unexpectedly risen to EUR 6 billion – or 0.78 percent of the GNP.

He added to the expected deficit of 0.4 percent would mean the year was expected to close with a state debt of 1 percent of total GNP.

Solbes said: "The State budget for 2004 will close with a deficit higher than initially expected, but in 2005 my forecast should still be the same.

"We should have public surplus of approximately 0.1 percent of the GNP within the limit of public spending." 

Despite the unexpected rise in public debt, Solbes said the government had no intention to restrict spending on targets which the Socialists had already agreed like investment in publicly owned companies.

Solbes said he favoured the proposed Law of Transparency in public accounts which the Socialists plan to bring in.

They hope this will increase public confidence in how the government runs its own finances.

Solbes accused the former conservative Popular Party (PP) government of not being open enough with public finances.

A row blew up over the weekend when Solbes was quoted by one newspaper as claiming the PP  hid level of public debit which it left to the Socialists when they came into power in April.

But Solbes denied saying "hidden debt" but did agree to the other remarks.

Meanwhile, he said the unions should take in account the companies which were struggling to compete.

Solbes added that when these companies were in trouble they could not always honour wage rise agreements and also remain competitive.

He said Spain needs to compete with quality products not with low wages and as such the improvement in productivity was vital.

He said he was not in favour of following the German example of increasing hours without raising wages, adding every country was "distinct".

Solbes added that he did not want to use social security surplus now but to use it for future pensions.

[Copyright EFE with Expatica]

Subject: Spanish news

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