Spain 2011 deficit could exceed 8.0 percent: minister

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Spain's finance minister warned Monday that the public deficit for 2011 could surpass eight percent of gross domestic product, a figure announced last week and already beyond the six percent originally forecast.

"It is possible that it exceeds 8.0%, but I hope it won't be much higher," Luis de Guindos told private radio Cadena Ser.

Spain's new right-leaning government announced on Friday that the 2011 deficit would top previous forecasts as it unveiled spending cuts and tax increases to claw back 15.1 billion euros ($19.6 billion) in 2012.

"A big part of this difference (in deficit forecasts) comes from the regions," de Guindos said, adding that he expected them to "make an effort".

Spain's 17 autonomous regions were particularly hit by a 2008 crash in the housing market and have become an increasing source of concern for economists and policy-makers.

"Everyone must participate in this effort," the minister said.

"We are in a very difficult situation, very complex, and without a doubt the hardest in the past decades in Spain," he said.

Prime Minister Mariano Rajoy, freshly installed after beating the Socialists in November elections, has vowed to meet Spain's target of reducing the public deficit to 4.4 percent of GDP in 2012.

© 2012 AFP

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