With growing economy, Spain presents cutback-free budget

AP News
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Posted: Mar 31, 2017 10:39 AM

MADRID (AP) — With the economy growing nicely, Spain's government on Friday presented its first budget since the global financial crisis in 2008 that does not include major austerity cutbacks.

The minority conservative government's plan for 2017 increases spending in health and education, two areas targeted for cutbacks in the crisis years. It also includes a 1 percent pay rise for civil servants, a reduction in value added tax for theater shows, concerts and bullfights and provisions to create 67,000 new public sector jobs.

Finance Minister Cristobal Montoro said it would allow Spain to meet the budget deficit targets agreed on with the European Union and end its period of overspending by 2018.

The budget must be approved by a majority in Spain's 350-lawmaker parliament, where it will be presented next week.

Prime Minister Mariano Rajoy's Popular Party, with 137 seats, lacks a majority there and will need outside support. The business-friendly Ciudadanos party, which helped Rajoy form a government, has said its 32 deputies will back the budget, leaving the government in need of just seven votes.

The budget was delayed after Spain went without a government for 10 months last year following two inconclusive elections.

The plan was presented a day after Montoro announced that Spain posted a 4.3 percent deficit last year, improving on the EU-set target of 4.6 percent.

It was the first time it had met a target figure since the EU put it under observation when the deficit soared to 11.2 percent in 2009. It has pledged to reduce the deficit to 3.1 percent in 2017 to avoid sanctions.

The Spanish economy grew 3.2 percent in 2016 consolidating three consecutive years of strong growth and making it one of the fastest growing in the EU. It is expected to expand by 2.5 percent this year.