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Spain's Budget Deteriorates So Much, It Gets A One Year Extension By The EU To Meet Deficit Targets

Tyler Durden's picture





 

Remember the running joke about Spain's constantly deteriorating budget? Or was that Greece's? No matter: there was a time when Spain was expected to hit a 5.3% budget deficit in 2012, and the Maastricht mandated 3.0% by 2013. So much for that. It turns out the Spanish economy has deteriorated so much in the last few months, that the EU had no choice but to grant Spain a 1 year extension, according to Europapress. In doing so, the EU has eased deficit targets for Spain by 1% in 2013, granting it a 6.3% deficit miss, a number which will be revised at least once more before the year is over, and the 2013 target is now widened by 1.5% to 4.5%. So much for serious deficit cutting. But let's blame "austerity" while we are at it. It would, however, be great if countries in Europe, or anywhere, were actually austere, and cut their deficits, instead of just blaming austerity for every economic problem while never actually enacting such policies (as we explained before). So while Spain gets an extension due to a "recession of rare violence", the trade off will be even greater supervision by the Eurogroup, or said otherwise, more people will watch how Spain does nothing to actually fix itself and then 6 months from now everyone will be shocked, shocked, when the 2013 deficit is over 8%. In other news, Spain 10 Year bond were trading at 7.08%, well wide for the day and about 20 bps shy of the all time record lows.

From Europapress

Economic ministers of the eurozone are set to approve an extension of one year for Spain, until 2014 instead of 2013, to correct its excessive deficit and return to bring it below the threshold of 3% of GDP.

"The Spanish authorities should put an end to its present excessive deficit situation by 2014," the draft decision that the ministers will discuss. If no consensus, the extension would be formally approved by Ecofin on Tuesday.

In return, the EU requires the government to "take further measures without delay" setting in 2012 to compensate for the deviation in the deficit during the first half. In addition, Spain will have to file "in late July 2012, the multi-year budget plan for 2013-2014" which detail all the measures envisaged to reduce the deficit.

With this relaxation of the fiscal calendar, the new deficit targets are 6.3% in 2012, 4.5% in 2013 and 2.8% in 2014. The Spanish authorities should achieve an improvement in structural balance of 2.7% of GDP in 2012, 2.5% of GDP in 2013 and 1.9% of GDP in 2014.

To achieve these objectives, the Eurogroup asks the Government to apply strictly the budgets of 2012 and plans for rebalancing of the autonomous communities. And he claims to be prepared "to take further action if they materialize the risks to the budgetary plans and accelerate the deficit reduction in 2013 and 2014 if economic or budgetary conditions will result in better than expected".

The EU agrees to allow more time for Spain to consolidate its public finances by the "recession of rare violence" in the country, according to EU sources explained.    STRENGTHENING THE MONITORING OF SPAIN

In return, the Eurogroup intensified surveillance over Spain. For starters, it gives the Government within three months to take "effective measures" that would meet the new targets. Furthermore, "the Spanish authorities should report on progress in implementing these recommendations in three months."

Finally, the EU calls on Spain "strictly enforce the new provisions of the law of budgetary stability on transparency and control the budget" and "to monitor compliance with budgetary targets throughout the year for all levels administration.

And it requires the creation of an "independent budgetary institution with the mission to control fiscal policy and provide analysis and advice in this area."

 


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Mon, 07/09/2012 - 06:34 | Link to Comment Snakeeyes
Snakeeyes's picture

As Gomer Pyle said, "Surprise, surprise, surprise!"

Their games will end eventually and all they can do is kick the can down the road.

Eurozone will NEVER seriously cut spending and stop issuing debt, Even then, the Central Banks will buy it.

Mon, 07/09/2012 - 06:42 | Link to Comment i-dog
i-dog's picture

Booot! The can gets another kick!

The European Nightmare, errr, Dream, just may outlive the American Dream, errr, Nightmare, after all. Either way, the NWO is #winning.

Mon, 07/09/2012 - 06:47 | Link to Comment AnAnonymous
AnAnonymous's picture

US world order...

Mon, 07/09/2012 - 06:53 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

I wouldn't exactly call this order.

 

Mon, 07/09/2012 - 08:22 | Link to Comment AnAnonymous
AnAnonymous's picture

I wouldn't exactly call this order.

_________________

Neither should one the NWO by this standard. Yet...

Mon, 07/09/2012 - 06:56 | Link to Comment i-dog
i-dog's picture

Give it a rest. You guys are in for the same fate as the US (soon) and Europe (shortly thereafter).

Mon, 07/09/2012 - 07:27 | Link to Comment negative rates
negative rates's picture

I think the msm has finally gone bonkers, next up are the politicians and they are a tougher nut to crack.

Mon, 07/09/2012 - 06:34 | Link to Comment financial apoca...
financial apocalyptic contagion's picture

beggars are choosing atm

Mon, 07/09/2012 - 07:21 | Link to Comment Dr Benway
Dr Benway's picture

ass to mouth?

Mon, 07/09/2012 - 08:20 | Link to Comment AnAnonymous
AnAnonymous's picture

beggars are choosing atm
_______________

Which proves the new US citizen old saying: beggars can be choosers... when they have their hands on the institutions.

Mon, 07/09/2012 - 06:37 | Link to Comment q99x2
q99x2's picture

mission to control

We have a problem.

 


Mon, 07/09/2012 - 06:47 | Link to Comment JustObserving
JustObserving's picture

"In doing so, the EU has eased deficit targets for Spain by 1% in 2013, granting it a 6.3% deficit miss"

Meamwhile in the US, home of the strong dollar, deficits are $1.5 trillion based on a GDP of $15.5 trillion or only 9.7% of GDP.

If you threw the increase in unfunded liabilities for the US along with the debt, then the US growth in debt and unfunded liabilities will be just 52.5% of GDP this year.

Mon, 07/09/2012 - 06:47 | Link to Comment AnAnonymous
AnAnonymous's picture

No austerity is already too much of austerity for US citizens.

While, when applied to others, austerity is never too applied.

This is what you get when world institutions are in the hands of US citizens.

Lets squeeze as much as possible the poor, they are already too rich.

And give as much space as possible to the US citizen middle class.

Mon, 07/09/2012 - 07:05 | Link to Comment i-dog
i-dog's picture

Nice attempt at a redirect! Some may even get sucked in by it (I'm sure your comrades do!).

Even the institutions of the US are no longer in US hands, let alone the international institutions directed out of Bilderberg, Tavistock, Sapienza and other groups/locations outside the US.

The US Supreme Court is in the hands of the Vatican. The US government is in the hands of miscellaneous luciferians (they come from Khazakhstan, BTW, not Kalamazoo). The US banking system is falling [further] under the control of the gnomes of the BIS...in addition to the US [non-]Federal Reserve[less] [non-]Bank being privately owned from the very beginning by private banking interests that have no allegiance at all to the US.

Mon, 07/09/2012 - 08:19 | Link to Comment AnAnonymous
AnAnonymous's picture

Yeah, yeah, sure. Dont forget the aliens, they are the REAL puppeeters behind the scenes.

Mon, 07/09/2012 - 09:08 | Link to Comment i-dog
i-dog's picture

Really? Have you posted videos of them on utoob yet?

Mon, 07/09/2012 - 06:59 | Link to Comment aleph0
aleph0's picture

Regierungsminister: Italiener machen drei Monate Urlaub pro Jahr

http://www.wirtschaftsfacts.de/?p=21216

 

Italians take 3 months holiday / year ?

... and now looking foranother EUR 100 Billion Bailout ?  ;-)

FWIW

Mon, 07/09/2012 - 07:26 | Link to Comment goldinpenguin
goldinpenguin's picture

the problem is that countries that ran deficits in the good times can't possibly impose austerity and balance budgets when there is 25% official unemployment like in Spain?

 

Chumbawumba said it best 'I sing songs that remind me of the good times, I sing songs that remind me of the better times", the PIIGS must learn to sing a different tune now

Mon, 07/09/2012 - 07:35 | Link to Comment DutchR
DutchR's picture

The real news from europapress: "Tom Cruise y Katie Holmes no quieren llegar a los tribunales"

Mon, 07/09/2012 - 07:49 | Link to Comment Snakeeyes
Snakeeyes's picture

Give Spain another year ... to ask for another year.

The FIGS crisis? France, Italy, Greece and Spain all saw 10 year sovereign yields pop this morning while the EURO tripped.

http://confoundedinterest.wordpress.com/2012/07/09/fig-crisis-or-pfig-greece-spain-italy-and-france-start-off-week-with-rising-sovereign-bond-yields-euro-declines/

Mon, 07/09/2012 - 08:34 | Link to Comment manapisca
manapisca's picture

@ aleph0 How can you believe such nonsense? I can assure you that what they say in that article is totally false. Although I'm not italian, I've been living in Italy for the last 20 years so I know what I'm talking about.  

Mon, 07/09/2012 - 08:51 | Link to Comment rwe2late
rwe2late's picture

Nice 'straw man'

instead of just blaming austerity for every economic problem

Except that no one is blaming "austerity for every economic problem".

Rather, the other way round, calls for austerity result from the economic problems. And the economic problems result primarily from diverting resources to the wasteful and unproductive military and financial sectors to the detriment of investment in useful infrastructure. The endemic corruption associated with those sectors, and the concentration of wealth upward, has debilitated the rest of society.

Nor is "austerity" per se necessarily opposed. It is only opposed when it is a cover for cutting needed social programs in order to continue the military excesses and financial swindling.

Mon, 07/09/2012 - 09:17 | Link to Comment Zero Govt
Zero Govt's picture

"...everyone will be shocked, shocked, when the 2013 deficit is over 8%."

well 99.999999% of people won't be, just the 0.0000001% that work in the Spanish Budget Office as they over-run for the 30th year in a row

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