Spain deepens budget deficit cuts, won’t use EU aid

MADRID – Spain will cut its budget deficit by a further 15 billion euros (US$20,13 billion) by 2011 and has no plans to resort to European Union aid to finance its debt, an Economy Ministry spokesman said yesterday.

A US$1 trillion emergency EU/IMF-backed euro zone rescue package agreed over the weekend boosted markets and the euro yesterday, but left longer-term questions about whether Europe’s weakest economies can manage their debt.Spain is trying to fend off comparisons with Greece as markets demand more measures to convince them that Spain can meet its target of cutting its budget deficit to an EU guideline of three per cent of gross domestic product (GDP) by 2013.Economists have said Spain’s target will be hard to meet given the poor prospects for economic growth.Still, Spain said it would not resort to the safety net provided by the EU and International Monetary Fund to raise financing.’The Spanish government will not have to use this measure at all, Spain’s deputy prime minister (Finance Minister Elena Salgado) was very clear about that yesterday,’ an Economy Ministry spokesman said.Instead, Spain will trim its budget deficit forecasts by 0,5 per cent of GDP in 2010 and one per cent in 2011 for a total of 15 billion euros, the spokesman said yesterday. Prime Minister Jose Luis Rodriguez Zapatero is expected to give more details on the planned cuts – which would bring the deficit to 9,3 per cent of GDP in 2010 and 6,5 per cent in 2011 – when he appears before parliament tomorrow.Spain’s budget deficit stood at 11,2 per cent of GDP in 2009. – Nampa-Reuters

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