Spain On Track To Meet Deficit Targets
First Published Tuesday, 29th May 2012 12:16 pm - © 2012 Dow Jones
-- Jan-April budget deficit at 2.4% of GDP due to one-offs
-- Retail sales drop at fastest pace in more than eight years
-- Central bank warns of second quarter economic contraction
MADRID -- Spain's government Tuesday said April data shows it's on track to meet key budget deficit targets this year, as the country's central bank warned that the euro zone's fourth-largest economy may remain in contraction in the second quarter.
Spain's central government budget deficit represented 2.4% of gross domestic product in the first four months of the year, compared with 1.9% of GDP in the January-March period.
Speaking at a press conference, Deputy Budget Minister Marta Fernandez Curras said the increase in the deficit was to be expected, since Spain's government had moved forward some fund transfers to cash-strapped regional governments, as well as other payments, as a way to provide liquidity for the economy.
In the four-month period, Spain's central government revenue rose by 1.3%, while expenses soared 10.3%, largely the result of the accelerated transfers and higher debt interest payments.
The removal of these one-off effects will result in lower than usual transfers later in the year, Fernandez Curras said. Spain's comparable budget deficit was 1.43% of GDP in the January-to-April period, down from 1.51% of GDP in the same period last year.
"Deficit trends this year are better than last year's," Fernandez Curras added. "The question here is whether we're worried about the way the budget is going, and we are not."
Earlier Tuesday, the Bank of Spain said recent data on consumer spending and construction investment point to a continued decline in Spanish GDP in the second quarter.
Separately, Spain's statistics agency said Tuesday that the country's retail sales fell by 9.8% on the year in April.
Spanish GDP fell at a 0.3% rate in the first quarter from the fourth quarter and the government recently said it thought second-quarter GDP would likely fall at a similar rate.