Spain misses deficit targets again – EU

PerformanceGurus Staff

Brussels, Oct 13

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]I[/dropcap]f Yogi Berra were to be alive, he would have said it is “Déjà vu” all over again! The European Union (EU) asked Spain to submit a new budget plan as its Draft Budgetary Plan (DBP) for 2016 failed to conform with the EU’s spending rules.The Spanish government submitted its Draft Budgetary Plan significantly ahead of the deadline, so that it could be approved before its parliament is dissolved ahead of elections on December 20 but The European Commission, the EU’s top executive body, said Spain’s DBP is at risk of non-compliance with the provisions of the Stability and Growth Pact, a set of rules designed to prevent EU member states from excessive budget deficits.

The EU limit for shortages is 3.0% of gross domestic product (GDP). In its DBP submitted in September, Spain expected the general government deficit to decline to 4.2% of GDP this year and to 2.8% in 2016, in line with recommended targets under the excessive deficit procedure and down from 5.8% in 2014.

“By carrying out decisive policies, Spain has made a remarkable turnaround from the crisis to become one of the fastest-growing Euro area economies,”

– Valdis Dombrovskis, Vice President of The European Commission for Euro and Social Dialogue

However, based on an “ad-hoc forecast”, the European Commission said it believed Spain’s headline budgetary deficit to decrease to 4.5% this year and to 3.5% of GDP in 2016, not meeting the target for Spain to correct the excessive deficit by 2016.

“In light of the compliance risks highlighted above and the fact that the Draft Budgetary Plan does not include up-to-date and fully specified measures for regional governments, the national authorities are invited to submit an updated Draft Budgetary Plan including fully specified regional measures, as soon as possible,” the European Commission said in a statement.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]M[/dropcap]oreover, the bloc also asked Spanish authorities to strictly execute the 2015 budget and take the necessary measures within the national budgetary process to ensure that the 2016 budget will be compliant with the spending rules. Spain has been asked to correct its excessive deficit by 2016. The country has undergone significant belt-tightening in recent years, with the government deficit having shrunken from 11% in 2009.

“By carrying out decisive policies, Spain has made a remarkable turnaround from the crisis to become one of the fastest-growing Euro area economies,” said Valdis Dombrovskis, vice president of the European Commission responsible for Euro and Social Dialogue.

But, Dombrovskis stressed that “for growth and job creation to continue and consolidate, Spain has to stay the course of reforms and responsible fiscal policy”.

Note:
1. Some of the content is used from IANS.