Spanish budget deficit falls as tax revenues rise

25th May 2010, Comments 0 comments

Spain's central government budget deficit fell 18 percent in the first four months of the year due to higher tax revenues, the finance ministry said Tuesday.

The central government budget deficit is distinct from the overall public sector budget which includes the balances of the central government, the social security system and regional and local administrations.

The government is under pressure to bring the overall public sector budget shortfall down to the eurozone limit of three percent of Gross Domestic Product by 2013 from 11.2 percent last year.

Spain has been named along with Portugal as a possible new weak link in the eurozone after debt-laden Greece, with the markets betting against the government being able to solve the problems.

At the end of April, the budget shortfall stood at 5.66 billion euros (6.93 billion dollars), equal to 0.54 percent of GDP, down from 6.91 billion euros, or 0.66 percent of GDP, a year earlier, the ministry said in a statement.

"Revenues are in the process of rebounding," finance secretary Carlos Ocana told a news conference.

Sales tax revenues rose 13.6 percent from the same period in 2009 to 20.4 billion euros while income tax was up 2.0 percent at 27.3 billion euros.

Last week, Prime Minister Jose Luis Rodriguez Zapatero's socialist government approved a new 15-billion-euro austerity package which includes a five-percent pay cut for civil servants and a freeze on pensions.

The cuts are on top of a 50-billion-euro (63-billion-dollar) austerity package announced in January.

© 2010 AFP

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