Spanish Minister of Finance, Cristobal Montoro./ Photo: Jumanji Solar
Miguel Cifuentes. 08/11/2016
The Government is decided to achieve the public deficit objectives, get the National Budget of 2017 off the ground as soon as possible, and promote the necessary reforms so that the Spanish economy increases by much more than 2%. It almost guarantees now that the deficit in 2016 will be of 4.6% and that it will be reduced by 3.1% the next year.
To that effect, it is determined “to make whatever it takes to achieve it, as it has been agreed with the European Commission”, according to sources of the Ministry of Economy. That means a cutback of 5,000 million euros in the public expenditure of this exercise and carrying out the necessary adjustments next year.
The Minister of Finance, Cristóbal Montoro, has sent a letter to the European Commissioner of Economy, Pierre Moscovici, to tell him that cutbacks are already being implemented. In the letter, Montoro tells the commissioner that “the deficit objective will be achieved, the budgetary execution is going better than expected and there is margin to achieve the objective”. The Government is also “very determined to get the National Budget of 2017 off the ground as soon as possible. It is very possible to get the necessary parliamentary support, beyond of that achieved in Mariano Rajoy’s investiture, with other groups that share objectives of economic policy leaving aside ideological differences”, according to sources of the Ministry of Economy.
This support would come from Ciudadanos, PNV, Coalición Canaria and some other parliamentary group. The Government does not rule out the possibility of PSOE “supporting some of the budgetary measures if there are balancing entries of social expenditure, which the Government is willing to agree with the socialists”, the aforementioned ministry points out. For its part, PSOE hopes the Government has support without having to turn to the socialists to approve the National Budget.
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The Government considers that there will be a National Budget with sufficient parliamentary support
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The Minister of Economy, Luis de Guindos, confirmed yesterday from the community capital all these announcements, when he emphasized that it is possible to keep all the agreements made with Brussels “because the Spanish economy keeps showing strength, it grows more than expected and budgetary objectives can be achieved, even with more margin”.
However, the economic challenges of the Government for 2017 and the coming years are very demanding. On one hand, Brussels pressures in the balance of the public accounts, threatening to sanction Spain with the loss of funds and the payment of millionaire fines. On the other hand, the political parties of the opposition and trade unions claim the end of cutbacks in public services, and the increase of public expenditure in health, education and dependence, coverage and unemployment benefits (there are 4 million unemployed people) and the improvement of pensions (2.7 million Spaniards have pensions below 600 euros per month).
Businesspeople claim the continuity of economic reforms and highlight two of them: 1) going more deeply into the labour reform to adjust recruitment and dismissal, and 2) the reform of pensions, since the Social Security system has a deficit of 16,000 million, which can amount to 17,000 million.
Finally, the Autonomous Communities demand the Government to reform the financing system to increase social expenditure. The Government has already warned them that it is turn for the opposite: keep cutting to achieve the objective of 3.1% required by Brussels for all the Public Administrations in 2017.