MADRID: The finance ministry said it informed the European Commission that it provisionally forecast its budget deficit at 3.6 percent of gross domestic product (GDP) from a previous 3.1 percent target.
It noted a backdrop of political instability after two inconclusive elections inside a year and eight years trying to haul itself back into shape following the 2008 economic crisis. Two months ago, Madrid just avoided an EU fine for repeated breaches of budget rules.
Brussels let both Spain and neighbouring Portugal off the hook, judging that both were trying to get their house in order and close in on the official ceiling of 3.0 percent of GDP.
But the EU told both countries to stay on a path of “fiscal consolidation” as the only way to create a foundation for durable growth. Brussels did not immediately comment on the latest forecast for the eurozone’s fourth largest economy.
After six years in recession, Spain reported a 2015 budget deficit of 5.1 percent of GDP, way off the 4.2 percent target set by the Commission.
For this year, Madrid must pare the deficit to 4.6 percent, and then 3.1 percent in 2017 – which it will now miss – then 2.2 percent in 2018.
