Bloomberg News

Spain ‘on Course’ for Central Budget Goal as Deficit Narrows

October 27, 2011

Oct. 27 (Bloomberg) -- Spain’s central-government budget deficit narrowed from a year earlier in the nine months through September and the government said it was on track to meet its target for the year.

The nine-month deficit narrowed to 3.42 percent of gross domestic product from 4.23 percent a year earlier, the Finance Ministry said, using new European Union calculations for the first time. The method spreads the shortfall more evenly over the year, bringing forward deficit that would have been booked in the fourth quarter, Deputy Finance Minister Juan Manuel Lopez Carbajo told reporters in Madrid today.

The central government is “on course” to meet its deficit target of 4.8 percent of GDP this year, Lopez Carbajo said. He declined to predict whether the overall gap, which also includes the regions and social security, would meet its goal of 6 percent.

Spain is struggling to convince investors it can rein in the deficit and stem a surge in its debt burden, as growth slows and data show regional governments are behind schedule to meet their targets. Spain’s overall deficit may amount to 6.3 percent this year, according to the average forecast in a Bloomberg survey of 10 economists.

Revenue from value-added tax rose 1.9 percent in the period and income-tax revenue increased 4.1 percent from a year earlier, the Finance Ministry said. The social-security system posted a surplus of 0.47 percent of GDP in the first nine months, compared with its full-year target of 0.4 percent, the Labor Ministry said today in an e-mailed statement. The surplus was 5.11 billion euros ($7.2 billion), compared with 9.48 billion euros a year ago.

--Editors: Eddie Buckle, Leon Mangasarian

To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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