Report: Spain doubtful on 2012 deficit target

AP News
Posted: Jan 20, 2012 10:11 AM
Report: Spain doubtful on 2012 deficit target

Spain's new government quickly sought to downplay remarks by its finance minister that raised doubts Friday over whether Madrid could deliver its goal of cutting its budget deficit.

Cristobal Montoro said in an interview with The Financial Times Deutschland that the target of 4.4 percent of gross domestic product this year was based on "outdated" growth forecasts by the previous government of 2.3 percent growth in 2012. The new government expects Spain to go into recession this quarter.

Montoro said of the 4.4 percent figure that "it is desirable, and it would be good to manage this," according to the report. It said he didn't want to make promises ahead of EU growth forecasts.

Hours later, the Spanish government scrambled to nuance the comments, which appeared to deviate from what has been a strict policy of deficit-cutting.

Deputy Prime Minister Soraya Saenz de Santamaria said the government was determined to meet the 4.4 percent goal and if "more reforms and greater rigor" were needed to achieve it, they would be enacted.

Prime Minister Mariano Rajoy's government says the 2011 deficit hit at least 8 percent of GDP, rather than 6 as forecast by the last government. Rajoy meets German Chancellor Angela Merkel in Berlin next Thursday.