Public aid to Spanish banks pushes deficit to 10.6 pct of GDP
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E-mail Xinhua, April 23, 2013
The Spanish public deficit reached 10.6 percent of the country's gross domestic product (GDP) in 2012 due to the process of recapitalization of the Spanish banking sector, the European Union (EU) statistics office Eurostat reported on Monday.
According to these data, the Spanish deficit is the highest one among all countries of the EU, even higher than that of Greece (10 percent), Ireland (7.6 percent), Portugal (6.4 percent) and Cyprus (6.3 percent), all affected by sovereign bailouts.
In annual terms, the deficit increased from 9.4 percent in 2011 to 10.6 percent in 2012, while if public financial aid to the banks is not included, the deficit would stand at 7.1 percent, which is above the 6.98 percent already announced by the Spanish government.
Eurostat also published data about Spain's 2012 public debt which reached 84.2 percent of Spain's GDP, slightly above the figure announced by the Bank of Spain last month -- 84.1 percent.
All deficit figures overshoot the required 6.3 percent. Spanish Minister of Economy Luis de Guindos said in an interview for The Wall Street Journal that Spain is already negotiating with the EU the deficit target.
He also said the government has to combine the deficit reduction and economic growth because in his opinion investors fear the fact that Spain might not grow.
De Guindos said Spain will do that, but slightly, in 2014 as the International Monetary Fund (IMF) said last week. On the other hand, he predicted the Spanish economy will shrink by 1.5 percent in 2013 compared to the 1.6 percent predicted by the IMF.
Both figures are above last prediction made by the Spanish government who forecasted a 0.5 percent contraction.
However, they had already announced they will revise down their forecasts next Friday to adapt them to the current economic situation of the country.
In this sense De Guindos stressed they will not announce new important austerity measures, while assuring that those already taken, such as the rise in sales tax, will have visible effects in the following years. Endi
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