Spain’s central government said Tuesday its budget deficit narrowed by just 4.9% on the year in the first 11 months of 2011, a sign that the country may struggle to reach its annual deficit target. The data was released soon after the country’s parliament gave its backing to Mariano Rajoy as prime minister with an austerity-focused mandate.
Spain’s government is looking to cut its overall budget deficit for 2011–also including regional and local governments–to 6% of gross domestic product from 9.2% last year. However, Spain’s outgoing government said Tuesday the central government’s deficit for January-November is already at EUR52.39 billion, or 4.8% of gross domestic product. On top of that, the regional governments’ own deficit was at 1.19% of GDP in the first nine months.
Speaking in parliament Monday during his inauguration debate, Rajoy–head of the conservative Popular Party and winner of the Nov. 20 general election–vowed to stay the course on deficit reduction, with EUR16.5 billion worth of budget cuts planned for next year. Rajoy will be officially appointed prime minister Wednesday, by Spain’s king, and said Tuesday he plans to unveil a list of cabinet ministers by Wednesday evening.
Spain’s outgoing government said Tuesday the 11-month data shows the country is still on track to reach the annual target. But this will depend on government outlays in December and possible budget overruns in the country’s social security system and the powerful regional governments.
EasyForexNews Research Team