Spanish Budget Deficit Rises to €38.6B
August 5th, 2009
Spain’s central government, which has boosted spending to fight a severe recession, said Tuesday its budget deficit soared to 3.64 percent of gross domestic product during the first half of the year.
The deficit rose to EUR 38.6 billion during the first six months of 2009 from EUR 4.6 billion during the same time last year, the finance ministry said in a statement.
Net income reached EUR 47.2 billion while expenditure grew to EUR 85.8 billion in the first half.
The government expects the overall budget deficit, which includes the budgets of the central government, local authorities and welfare services, to reach 9.5 percent in 2009, well above a European Union limit of 3.0 percent.
Finance Minister Elena Salgado has said Spain will bring its deficit in line with the limit by 2012 as demanded by the European Commission.
Prime Minister Jose Luis Rodriguez Zapatero’s socialist government has launched stimulus measures and tax cuts valued at around 2.3 percent of GDP this year which it says is the largest such aid package in Europe.
Spain’s overall budget deficit lurched into deficit at 3.8 percent in 2008 from a surplus of 2.23 percent in 2007 as the government began to spend heavily to boost an economy which plunged into its first recession in over a decade.
In January the credit rating agency Standard and Poor’s downgraded the long-term rating for debt issued by Spain.
Formerly one of the eurozone’s chief engines of economic growth and job creation, Spain suffered an abrupt change of fortunes last year when the global financial crisis hastened a correction that was already underway in the Spanish property sector.
Story from Expatica
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