Spain already close to deficit target for the full year

The deficit posted by Spain’s public administrations, excluding the country’s municipalities, totaled 54.293 billion euros in the first seven months of the year, equivalent to 5.27 percent of GDP, and close to the target for the full year of 6.5 percent.

Whether or not the European Union decides to extend a bailout granted to Spain to recapitalize its banks will depend on whether the government of Prime Minister Mariano Rajoy appears able to meet its deficit target for this year. The administration believes it is on track to do so without recourse to further austerity measures, and rejects the need to extend the duration of the availability of the bailout.

The central government’s deficit in the period January-July amounted to 4.55 percent of GDP, compared with a target of 3.8 percent for the full year. The average shortfall of the country’s regions was 0.77 percent, compared with a full-year goal of 1.3 percent. The Social Security system booked a surplus of 0.05 percent, but is expected to book a deficit of 1.4 percent for the full year.

The finances of the municipalities are close to being in equilibrium, with some looking to post a surplus.

The figure for the central government in part reflects a fall of 30 percent in corporate tax revenues in the year so far. However, the administration expects its coffers will be swelled by tax payments due to be made by companies in October.