Brussels, 02/03/2012 (Agence Europe) - Spanish Prime Minister Mariano Rajoy has announced that his country hopes to achieve a public deficit of 5.8% of GDP in 2012, while the previous government had made a commitment with the European Commission that the deficit would be brought down to 4.4% of GDP. The head of the Spanish government deems his level to be reasonable, in the knowledge that many expert economists consider the deficit objective of 4.4% of GDP in 2012 to be unrealistic. The country is expected to enter recession again from this quarter on after enjoying slight growth of 0.7% of GDP in 2011. It also suffers from mass unemployment with the highest unemployment rate in Europe, as nearly 23% of Spain's population of active age is without employment.
Rajoy, however, has said that the new target complies with the stability and growth pact. He believes it to be in line with the rules - not only with the European Union's recommendation but also with the stability and growth pact. He explained that, despite the change of deficit target, Spain will keep to the course set to reduce structural deficit by 1.5% annually. Rajoy also explained that his country maintains the 3% of GDP public deficit target for 2013.
The Spanish government will be adopting its draft budget for 2012 at the end of March. In April, it will present to the European Commission its stability programme comprising the objectives relating to reduction of public deficit. In May, the Commission will put recommendations to the European Council which will come to a decision on this in June.
Although the target for 2012 increases from 4.4% to 5.8%, the government will have to impose a severe austerity cure on the country. It is expected to carry out further a €15 billion adjustment (in addition to identical budgetary consolidation in December) to reduce the deficit from 8.5% in 2011 to 5.8% in 2012.
Spain, which has the fourth largest economy in the eurozone, has found itself in the eye of the storm since the beginning of the week, when it announced that its public deficit had reached 8.5% of GDP in 2011 and not 6%, the cap fixed by the previous Socialist government. Rajoy had gone to the European Council in Brussels in the hope that his European partners would grant him more leeway. However, “there was no debate on any easing whatsoever”, European Commission President José Manuel Baroso said forcefully on Friday. Herman Van Rompuy, President of the European Council, told the press that, in the case of several member states cited (Spain and the Netherlands will not be attaining their budgetary objectives), it will be necessary to make up for the deficits. On the subject of the objectives of Spain and the Netherlands, Angela Merkel, German Chancellor, underlined that “these countries will present their draft budget, and the Commission will give its opinion. Mr Rajoy told me that his government will spare no effort (for budgetary consolidation)”. “We have only just adopted new rules (for budgetary discipline), and it is out of the question to begin asking for those rules to be eased”, warned Finnish Prime Minister Jyrki Katainen. Nicolas Sarkozy, President of France, underlined that, in Spain, Mariano Rajoy's government has taken “extremely robust” decisions. (LC with AN/MB/EH/transl.jl)