Spain budget deficit continues lower in November: data

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Spain's central government public deficit dropped by 45.8 percent to 38.8 billion euros at the end of November from 71.5 billion euros during the same time last year, the government said Tuesday.

The central government deficit, which does not include regional government spending which is a major component in the country's overall public finances, during the period was equal to 3.68 percent of gross domestic product, compared to 6.7 percent for all of last year, it said in a statement.

"This allows us to anticipate that the government will respect its deficit reduction goal," the statement said.

Spain has slashed spending, raised taxes and frozen pensions to rein in its public deficit and soothe market feats that it could need a bailout like Greece and Ireland.

Nationally, the government is aiming to reduce the public deficit to 9.3 percent of GDP this year, from 11.1 percent in 2009, then to 6.0 percent next year and the eurozone limit of 3.0 percent in 2013.

Spain has faced higher borrowing costs since Ireland last month agreed to a bailout from the International Monetary Fund and the European Union similar to the one granted Greece in May.

A rescue for Spain would be far bigger than anything seen to date in Europe: the size of its economy is twice that of Greece, Ireland and Portugal combined.

Last week Moody's rating agency, which trimmed Spain's sovereign debt rating from top-notch Aaa to Aa1 in September, said it had now put it on review for a further cut.

Earlier Tuesday it said it had downgraded its credit rating for two of Spain's 17 regional governments, Castille-La Manche and Murcia.

Finance Minister Elena Salgado said Monday that the 17 regional governments had a combined public deficit during the first nine months of the year equivalent to 1.24 percent of GDP, a figure which is "perfectly compatible" with the year-end target for regional government debt of 2.4 percent.

Spain's 17 Spanish regions have considerable autonomy, with the right to issue bonds to finance their expenses.

They account for around one-third of general government expenditures -- and just over half of the nation's total number of civil servants.

© 2010 AFP

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