MADRID (Reuters) – Spain will meet this year with the goal of a public deficit of 4.6 percent of GDP set by the European Union last August, said Thursday the agency in charge of overseeing the sustainability of the Spanish public finances.
“The expected reduction in spending in almost one point of GDP and the extension of the deficit target will likely make its fulfillment, despite the fact that, predictably, the revenue will grow below the nominal GDP”, said the Independent Authority for Fiscal Responsibility (AIReF) in its monitoring report quarterly budget.
Brussels smoothed the path of fiscal consolidation in Spain after the country missed last year with the deficit target, but demanded measures to balance the public accounts before the 15th of October, despite the policy paralysis and the limitations of a government in functions.
The Spanish supervisor said that the changes approved last Friday in the corporate tax will allow a positive evolution of this figure and tax in the second half of the year, reversing the trend registered until now.
The AIReF said, however, that this tax reform, which aims to increase to 8,000 million euros in revenues before the end of the year to reconcile accounts and to comply with Brussels, will not be sufficient to achieve the budgetary provision.
Given that the Government functions has not ratified the distribution of the new deficit target among the different administrations, the AIReF said that it was difficult to fine-tune the possibility of compliance of the different sub-sectors public of the country.
however, even given this limitation, the tax authority said that it was anticipated that the Spanish Central government closed the year with a delay budget of 2.2 percent of GDP, while the Social Security recorded a deficit of 1.6 per cent.
The Autonomous Communities would have a deficit of around 0.8 percent of GDP, and the Councils would help to compensate for the gaps in other administrations with a surplus of 0.4 per cent.
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