Spanish Regions are Committed to Budget Cuts, Montoro Says

A majority of Spanish regions pledged to meet this year’s budget-deficit target after last year’s slippage contributed to the nation missing its total goal agreed to with the European Union.

“All Spanish public administrations are committed to reducing the public deficit,” Budget Minister Cristobal Montoro said at a press conference in Madrid today after meeting with the 17 semi-autonomous regional governments.

A majority of 14 regions agreed to respect a deficit target of 1.5 percent of gross domestic product for 2012, according to Montoro. He said the government has the means to force Andalusia, which voted against, as well as Catalonia and the Canary Islands, which didn’t vote, to comply.

Prime Minister Mariano Rajoy’s People’s Party government increased Spain’s total deficit target for 2012 to 5.8 percent of GDP from 4.4 percent on March 2 after failing to rein in the euro area’s fourth-biggest shortfall last year and as the nation risks its second recession since 2009.

Spain’s regions control over a third of public spending including health and education and their deficit was nearly twice their target last year at 2.9 percent of GDP, pushing the nation’s total shortfall to 8.5 percent. That was above the 6 percent EU limit for 2011.

‘Correcting Deficits’

“No one should be lazy when it comes to correcting deficits because it means sending the wrong message to everyone, to the citizens of each region and to the investors funding it,” Montoro said.

The central government’s own 2012 budget due on March 30 will be “very austere” and it will be “a reference” for all regions to follow suit and reduce their own budgets, Montoro said.

Montoro said the budget stability law approved by the government this month enables it to pressure all regions to comply with deficit reduction goals. He also reiterated that no region would receive help to face unpaid bills to suppliers unless its budget plan was approved by the central government.

Catalonia, Spain’s largest region with an economy the size of Portugal’s, plans a deficit of 1.3 percent of GDP this year, even as it has criticized the larger effort the regions have to make this year compared with the central government.

Andalusia, the southern region that includes the city of Seville, is the only Socialist-governed region left in Spain and the People’s Party is battling to win it in an election this month.

To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editor responsible for this story: Louis Meixler at lmeixler@bloomberg.net

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