Spain reduces payments deficit: official data

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Spain sharply reduced a deficit on its current payments account in March, official data showed on Monday.

The Bank of Spain said that the deficit fell to 4.334 billion euros (5.3 billion dollars) from 6.623 billion euros in March 2009.

The bank said: "The fall is explained mainly by a reduction of the deficit on the balance of income flows and to a lesser extent by a reduction of a negative balance on transfers, and to an increase in a surplus on services."

In the first three months of the year the cumulative outcome of the balance of payments on current account showed a deficit of 17.439 billion euros from a deficit of 22.051 billion 12 months previously.

The current account is a register of all payments into and out of a country, by category of activity such as trade in goods and services and financial flows for investment for buying stocks and government bonds, or for repatriated earnings by foreign workers, for example.

It is a fundamental medium-term indicator of the underlying stability, competitiveness and structure of an economy.

In recent months, Spain has been sliding towards difficulties over its public finances because of big public deficits and debt. The Spanish government has recently announced measures to reduce the deficit.

The country has also been hard hit by the global economic crisis.

Late on Friday a leading credit rating agency, Fitch downgraded the standing of Spanish sovereign debt, saying that this was because the country seemed set for a period of weak growth.

© 2010 AFP

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