Here We Go Again: Spain Says 2012 Budget Deficit "Will Be Bigger Than First Estimated"
Back in December 2011, Europe swooned and bond yields soared when it was shocked, shocked, to learn that Spain had been lying about its budget deficit all year, a number which was subsequently hiked several more times. Then in 2012, to keep up with the pretense that things are better, Spain once again did what it does best: fudged numbers, this time desperate to make it appear that its actual government deficit was better than expected because one had to 'obviously' exclude all those items that are not part of the government spending... like payments for its broke provinces, or indirect funding for its broke banks. Now it turns out that in addition to fudging the definition of "budget", Spain was, surprise surprise, lying once again. From Bloomberg: "The Spanish government said its 2012 budget deficit will be bigger than first estimated after the European Union requested changes in how tax claims are computed. The budget shortfall excluding aid to the banking sector was 6.98 percent of gross domestic product last year, more than the 6.74 percent predicted on Feb. 28, Deputy Budget Minister Marta Fernandez Curras told reporters in Madrid today. That compares with 8.96 percent in 2011."
Spain is seeking an extension from other euro-region governments to reorder its public finances as Prime Minister Mariano Rajoy says output may shrink more in 2013 than the 0.5 percent he initially predicted. That’s a third of the contraction forecast by the International Monetary Fund. Spain is due to submit budget plans through 2014 to the European Commission next month.
Naturally, 2013 is already off to a "good" start:
The central government’s deficit for the first two months of the year widened to 2.22 percent of GDP from 1.95 percent last year, according to data calculated using the new methodology, Curras said.
How long, one wonders, until that number too is revised higher?
In the meantime, we await patiently to learn just how much more cash Europe will be handing over to Spanish banks. The same cash it refused to hand over to the Cypriots, and to prove that in the European animal house, one's "equality" is directly proportional to one's systemic collapse risk:
Eurostat, the EU statistics office, told Spain to compute tax refunds in its national accounting as and when they are claimed instead of waiting for the claims to be checked by tax authorities, Curras said. That means Spain must revise its budget-data series that starts in 1995, she said, without commenting on when the figures will be released.
“Bond markets need to know the country’s exact fiscal metrics,” Justin Knight, a London-based rates strategist at UBS AG, said by telephone. “It’s so difficult to tell what the real numbers are. We’ll have to wait for Eurostat’s release.”
The Budget Ministry delayed tax refunds in the fourth quarter as it intensified controls. Cash-basis data released this month by the national tax agency showed refunds surged 83 percent in January from a year ago after dropping 62 percent in December. Tax refunds declined an average of 7.9 percent in 2012, more than twice as much as in 2011.
“It is a bit of an accounting game,” said Ignacio Conde- Ruiz, a Madrid-based economist who works for the economic research institute Fedea.
You don't say. The bottom line, however, for Spain is quite clear:
The central government’s interest bill surged 15 percent last year to 26 billion euros, while tax receipts slumped 21 percent. The cost of servicing debt represented 30 percent of the taxes collected at the end of December, up from 20 percent a year earlier.
In other words: absolutely unsustainable on an actual, truthful, adjusted, revised, recasted, pro forma or simply fraudulent basis.