The Spanish government on Tuesday presented to Parliament a budget for 2012, the hardest of the country’s history with the clear goal of reducing the public deficit and hence public debt, rising almost ten points to 80% of GDP, although remains low compared to Europe.
“Public debt will rise from 68.5% of GDP at end 2011 to 79.8%, a level still below that recorded a 90.4% average for the euro area,” said the Minister, concurrently with the attendance at the Congress of the finance minister, Cristobal Montoro, to present the draft budget.
These budgets “respond to the serious economic moment is going through Spain” and are “absolutely committed to the downward correction of the deficit” of 8.51% registered Spanish in 2011 to 5.3% Interio Product (GDP) agreed with Brussels this year, the main objective of the Government, said Montoro.
“The challenge of these budgets is to regain the confidence of European partners in Spain, restore investor confidence,” said Montoro, to present a project that provides for an adjustment of 27,300 million euros with tax increases and spending cuts.
“The biggest problem is the financing of Spain’s economy is the high indebtedness of our economy with the rest of the world”, according to Montoro, a debt feedback about the deficit.
“The interest rate of funding has risen, but remains low and that has greatly increased the cost of debt for deficit”, which requires to borrow to finance, chief economist of society Intermoney brokerage.
“So the minister (Montoro) has said it has to stop the deficit. Spain does not have a debt problem, has a deficit problem that is growing very fast,” he said Diez.
“We must reduce the financial dependence,” said the Spanish minister, before assuring that “sure to come after economic recovery.”
Spain earmarked EUR 28.848 million to pay the interest on the debt, representing 2.71% of GDP, well below countries such as Ireland or Portugal difficulties.
The government plans to reduce by 2012 by 30% its borrowing requirement, but the interests of debt and other financial costs and weigh significantly on public finances, also burdened by unemployment benefits in a country with a record unemployment rate.
Unemployment continued to rise in Spain in March stood at 4.75 million unemployed, which represented an increase of 9.63% year on year, according to figures released Tuesday by the Ministry of Employment.
Without its economic engine, construction, the country has the highest unemployment rate in industrialized countries: according to the National Statistics Institute, which uses a different calculation method, the rate stood at 22.85% in late 2011.
Spain will allocate more than 28,500 million euros to pay unemployment benefits which is 5.4% less than in 2011, according to the draft budgets.
“We tried that this crisis ends soon,” the minister insisted Montoro, remembering that budgets have been in operation since early this year on the basis of budgets carried over from last year.
The Spanish minister and tried to step out of the statements arrivals from the European Central Bank to call for the budget to be debated in the House of Representatives between 24 and 26 April, be approved by emergency procedure.