Spain’s deficit to rise, predicts Solbes

21 September 2004

MADRID – Spain’s deficit will rise to 1.81 percent of its GNP this year, the Economy Minister Pedro Solbes said Tuesday.

The figure is higher than the 0.4 percent of the GNP which had been predicted by the government for 2004.

Solbes made the prediction at the Spanish parliament’s economic and treasury commission.

He said the figure could change depending on the level of state income and spending on the budget.

Solbes said more than half of the state deficit was as a result of debts incurred by the present Socialist government from the previous government of Jose Maria Aznar.

The state budget for the current year will include EUR 8 billion (USD 10 million) debt of which five billion represent 80 percent of the debts run up by state railway company Renfe.

The remainder includes paying back EUR 2.5 billion to the southern regional government of Andalucia, Solbes said.

The 2004 budget also includes debts of Spain’s state broadcasters although Solbes did not give a figure for that portion.

Part of the overall deficit will be balanced out by a small surplus on the books of Spain’s regional governments as well as in the social security system worth around 0.7 percent of gross domestic product.

A finance ministry spokesman said the overall public sector deficit, including figures for the national and regional governments and social security would come in this year at around 0.5 percent of GDP, moving to a small surplus in 2005.

Last year saw Spain’s public accounts end in a surplus worth 0.42 percent of GDP.

The Aznar government made targeting zero deficits a key plank of economic policy and the new Socialist administration has stated it intends broadly to abide by that policy.

[Copyright EFE with Expatica]

Subject: Spanish news