Spain bans deficits in regions from 2020 - Emirates24|7

Spain bans deficits in regions from 2020

Spain's government said Friday it had approved a new budget law that bans the country's 17 powerful regions from sliding into deficit from 2020.

"All autonomous regions must present balanced or surplus budgets," Budget Minister Cristobal Montoro told a news conference after a weekly cabinet meeting adopted the measure.

The aim was to "regain an image of solidity with our investors" by laying the foundations for a return to economic growth and job creation, the minister said.

The 17 Spanish regions, which run their own big health and education budgets, have been heavily in debt since the 2008 collapse of a property bubble.

The regions are expected to post an overall public deficit equal to 2.3-2.4 percent of gross domestic product for 2011, missing a 1.3-percent target set by Madrid by a large margin.

Spain has vowed to curb overspending by 2020 by law, aiming to keep its accumulated public debt below a ceiling of 60 percent of GDP and the structural public deficit at a maximum 0.4 percent of GDP.

The planned budget law accompanies a constitutional reform enforcing budget discipline, which was passed in September last year under the then Socialist government.

Prime Minister Mariano Rajoy's conservative Popular Party backed the constitutional reform and then won November 20 general elections with a promise to fix Spain's budget and economic woes.

The latest budget law should sail through parliament. Although the Popular Party enjoys an absolute majority since its crushing election win, it is expected to seek a consensus with the opposition.

"The government aims to achieve fiscal consolidation and a reduction of the deficit and public debt," Deputy Prime Minister Soraya Saenz de Santamaria told reporters.

Spain is expected to miss its target of reducing the public deficit to 6.0 percent of GDP in 2011 from 9.3 percent the previous year, with the government predicting a 2011 figure closer to 8.0 percent.

With the legislative reform, "Spain becomes a pioneer", taking a lead in the European Union's efforts to enforce greater budget discipline, Santamaria said.

Rajoy has promised to meet Spain's 2012 target of 4.4 percent of GDP despite the budget slippage last year and the prospect of recession in 2012.

Spain announced Friday that the unemployment rate rose to a near 17-year high of 22.85 percent at the end of 2011 with nearly 5.3 million people out of work. The Bank of Spain has forecast the economy will shrink 1.5 percent in 2012.

Spain bans deficits in regions from 2020

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MADRID, Jan 27, 2012 (AFP) - Spain's government said Friday it had approved a new budget law that bans the country's 17 powerful regions from sliding into deficit from 2020.

"All autonomous regions must present balanced or surplus budgets," Budget Minister Cristobal Montoro told a news conference after a weekly cabinet meeting adopted the measure.

The aim was to "regain an image of solidity with our investors" by laying the foundations for a return to economic growth and job creation, the minister said.

The 17 Spanish regions, which run their own big health and education budgets, have been heavily in debt since the 2008 collapse of a property bubble.

The regions are expected to post an overall public deficit equal to 2.3-2.4 percent of gross domestic product for 2011, missing a 1.3-percent target set by Madrid by a large margin.

Spain has vowed to curb overspending by 2020 by law, aiming to keep its accumulated public debt below a ceiling of 60 percent of GDP and the structural public deficit at a maximum 0.4 percent of GDP.

The planned budget law accompanies a constitutional reform enforcing budget discipline, which was passed in September last year under the then Socialist government.

Prime Minister Mariano Rajoy's conservative Popular Party backed the constitutional reform and then won November 20 general elections with a promise to fix Spain's budget and economic woes.

The latest budget law should sail through parliament. Although the Popular Party enjoys an absolute majority since its crushing election win, it is expected to seek a consensus with the opposition.

"The government aims to achieve fiscal consolidation and a reduction of the deficit and public debt," Deputy Prime Minister Soraya Saenz de Santamaria told reporters.

Spain is expected to miss its target of reducing the public deficit to 6.0 percent of GDP in 2011 from 9.3 percent the previous year, with the government predicting a 2011 figure closer to 8.0 percent.

With the legislative reform, "Spain becomes a pioneer", taking a lead in the European Union's efforts to enforce greater budget discipline, Santamaria said.

Rajoy has promised to meet Spain's 2012 target of 4.4 percent of GDP despite the budget slippage last year and the prospect of recession in 2012.

Spain announced Friday that the unemployment rate rose to a near 17-year high of 22.85 percent at the end of 2011 with nearly 5.3 million people out of work. The Bank of Spain has forecast the economy will shrink 1.5 percent in 2012.

 

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