Spanish government has shored up all it can for crisis
Spain has funneled all the public spending it can into tackling the country's economic crisis, Spanish Finance Minister Pedro Solbes said in an interview published Sunday.
MADRID - "In my opinion, we have used all of the public spending margin we have, we have even gone a little further than we had to, if you interpret the stability pact in a strict way," Solbes told El Pais.
Under the terms of the stability pact, eurozone members are not allowed to run up deficits in excess of 3.0 percent of gross domestic product (GDP).
To counter a lagging economy sparked by a slide in the Spanish real estate sector, Prime Minister Jose Luis Rodriguez Zapatero's government increased public spending in 2008.
As the country teetered closer to the brink of recession, the government handed out 14 billion euros (19 billion dollars) to Spanish families in an income tax cut.
It also earmarked a large portion of an 11-billion-euro stimulus package for public works.
"We are living in a very unusual situation and different from everything that has happened" in the past, said Solbes.
"We are going towards something exceptional," he added.
The Spanish government on Friday revised its economic forecasts, slashing a predicted growth of 1.0 percent to negative growth of 1.6 percent, pushing the country's economy to the brink of its first recession since 1993.
Unemployment, already the highest in the European Union, will hit 15.9 percent this year, worse than the 12.5 percent forecast in July.
The public sector budget deficit will clearly surpass the eurozone limit of 3.0 percent of output in 2009, the government said.
Solbes nevertheless suggested that Madrid has been relatively cautious in its public spending.
"The public deficit will stay below 55 percent of GDP, while in other countries it will reach 70 percent," he said.