The Eurozone agreed to relax the deficit target of Spain in 2012, but up to 5.3% of GDP, against 5.8% as proposed by the Prime Minister Mariano Rajoy.
“We believe that Spain should make a greater effort,” said Eurogroup Chairman Jean-Claude Juncker, in a press conference after the meeting of finance ministers of the 17 eurozone countries in which it urged Spain to continued commitment of 3% of GDP in 2013.
A few days ago the Spanish prime minister, Mariano Rajoy, came as a surprise to the European Commission in Brussels announced that the deficit target for Spain this year would be 5.8% and 4.4%, as had been agreed the previous government.
“The Spanish government was willing to consider” the application of Brussels, Juncker said.
The Eurozone said they had “noticed a large gap in the fiscal year 2011 Spanish, you will need a greater effort in 2012.”
Spain, the eurozone’s fourth largest economy, argues that it violates the Stability and Growth Pact, recently ratified by the European Union, as the deficit target of 4.4% was agreed in a different context. At that time growth was expected for the country in 2012 and closed 2011 with a deficit of 6%.
However, the EC forecast a recession for the Spanish economy this year and Rajoy announced shortly after taking office that the country ended 2011 with a deficit of 8.5%, much more than they had estimated the previous Socialist government.
Besides Spain insisted on several occasions that remain committed to a deficit of 3% for 2013, the cap allowed by the European Union.
“We welcome the commitment of the Spanish government to meet the deficit target of 3% of GDP in 2013,” said Eurogroup Chairman Jean-Claude Juncker told a news conference.
“Spain must do more to create more jobs,” he said to him, the Monetary Affairs Commissioner Olli Rehn.
The move to soften the Spanish deficit “is not a violation of the PAC,” he said.
“The most important is that Spain meet its deficit target (3%) by 2013,” he said.
Category: Mutual Funds