Spain will sell 243.9 billion euros ($329.2 billion) of bonds and bills next year to cover refinancing needs and its budget deficit, increasing its debt burden to 99.8 percent of gross domestic product.
The debt-to-GDP ratio will rise from 94.2 percent at the end of this year, according to the draft budget law posted on the Budget Ministry’s website today. Pension payments will rise 0.25 percent and an increasing number of retirees will push the government’s bill up 4.9 percent to 127 billion euros, as the first leg of a social-security overhaul takes effect.
The central government’s budget, which sets aside 29.7 billion euros for jobless benefits and 36.6 billion euros for interest payments, aims to cut the deficit without raising taxes. The government is trying to shrink the budget gap by broadening the tax base and will conduct a review of the tax system next year.
The government is aiming for a deficit of 5.8 percent of GDP next year, compared with a target of 6.5 percent this year. The European Union, the European Central Bank and the International Monetary Fund, the three institutions monitoring the country’s bank bailout program, have all expressed concern that Spain will miss its budget target for a fifth consecutive year in 2013.
The 2014 budget is based on a growth forecast of 0.7 percent for next year. By comparison, the IMF forecast in July the Spanish economy will stagnate next year while the EU in May projected a 0.9 percent expansion.
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