Spain Fiscal


Spain: Spain to miss deficit targets

October 24, 2012

Meanwhile, the central government fiscal deficit reached 3.9% of GDP in the January-September period (January-August: 4.3% of GDP). This compares with a central government deficit goal of 4.5% of GDP for the whole 2012, which prompted Treasury Minister Cristobal Montoro to state that the central government "is very close to meet the deficit target". Nevertheless, Spain is to overshoot its overall fiscal deficit goal, as the improvement in the central government figures will be more than offset by a worse-than-expected performance of the social security system which, according to some estimates, will record a 1.0% of GDP deficit this year, compared with an initial forecast of a balanced budget. Consensus Forecast panellists continue to lower their deficit projections and now expect the fiscal deficit to reach 7.1% of GDP this year, well above the 6.3% of GDP fiscal deficit target set by the government. Moreover, the market is also sceptical that Spain can meet its 4.5% of GDP fiscal target for 2013, as the government's projection for GDP growth is considered too optimistic. Against this backdrop, a majority of analysts still anticipate that elevated financing costs, combined with the country's fiscal woes, will force Spain to ask for a full bailout in the near future.


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