Acting finance minister revises Spanish deficit down from 5.2% to 5%

Six days after Spain announced a public deficit of 5.16%, nearly a full percentage point over the European Union target for the government, acting Finance Minister Cristóbal Montoro has announced that this figure is being revised downward.

The implementation of European accounting standards affecting revenues from a newly reorganized radio spectrum means added revenues for the Spanish state of €1.6 billion in 2015, said Montoro.

As a result, the deficit would now stand at 5% of gross domestic product (GDP).

We will make a proposal for the creation of a committee of experts to start working on cleaning out regional financing

Finance Minister Cristóbal Montoro

“There is a new modification,” said Montoro at a congressional committee appearance on Thursday. “It is a methodology change due to the budgetary consequences of the new use of the radio spectrum that member states have been developing from 2011 to 2015.”

European laws make it mandatory to include in the 2015 accounts the revenues from the 2011 sale of television licenses. This income gets counted now because the sector reshuffle ended in 2015.

“This means that the deficit that we sent to Eurostat will be revised downwards,” said Montoro.

The good news only affects the central government, however, whereas regional and local administration defecits stay the same.

Montoro has blamed Spain’s regions for much of the country’s budget deficit, and vowed to make them tighten their belt to bring their own shortfall down from 1.66% and closer to their target of 0.7%.

A letter to the regions

To that effect, the minister has sent a letter to 12 regions who missed their targets last year, instructing them to rein in their public spending and reminding them of improved financing conditions this year.

He also said that he will create an expert task force to draft a reform of this regional financing system.

“We will make a proposal for the creation of a committee of experts to start working on cleaning out regional financing. We have reputed experts and we must activate them,” he said.

English version by Susana Urra.