Spain posts below-target 2010 budget deficit

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Spain posted a budget deficit of 5.07 percent of gross domestic product last year, well below its target of 5.9 percent due to higher tax revenues and tough austerity measures, Finance Minister Elena Salgado said Tuesday.

"Available data shows a budget deficit of 53.444 billion euros (72.805 billion dollars), or 5.07 percent of GDP," Salgado told a news conference.

The provisional figures "completely confirm the stability objective set by the central government" and fulfill its aim of keeping the deficit below 5.9 percent in 2010.

Salgado noted in particular the recovery of tax revenues as one reason for the unexpectedly strong result.

"The total tax revenues, which are the most significant, have been better than expected and increased by 10.9 percent over the previous year," she said.

The budget deficit covers government expenditures. It is different from the public deficit, which also includes the figures from the social security, regional governments and state-owned corporations.

The public deficit hit 11.1 percent of gross domestic product in 2009, the third-highest in the eurozone after Greece and Ireland.

The Socialist government Prime Minister Jose Luis Rodriguez Zapatero has pushed through unpopular austerity measures, including higher sales taxes and cuts to public workers' wages, to slash this to 9.3 percent in 2010, 6.0 percent in 2011 and to below the 3.0-percent European Union limit by 2013.

The Spanish economy, the European Union's fifth largest, slumped into recession during the second half of 2008 as the global financial meltdown compounded the collapse of the once booming property market.

It emerged with tepid growth of just 0.1 percent in the first quarter and 0.2 percent in the second, but then stalled with zero percent growth in the third.

Zapatero said Monday that the economy will shrink less than expected in 2010 as the fourth quarter returned to growth.

© 2011 AFP

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