Spain Deficit Target Allows Margin for Maneuver, Official Says

Spain can deviate from its 2012 deficit target of 4.4 percent of gross domestic product without breaching European Union budget rules, said a government official who declined to be named in line with policy.

The European Stability and Growth Pact allows for a certain margin of maneuver as long as correction measures are taken, the official said, adding that the target was set by the previous Socialist government and that the People’s Party government of Prime Minister Mariano Rajoy is working on a revised stability program.

Spain said on Feb. 28 that it missed last year’s deficit target by a wider margin than projected after economic growth slumped. The government is pushing for the EU to review stability programs to take into account recession forecasts.

Rajoy has already adopted a 15-billion euro ($20 billion) package of measures to reduce the deficit since taking over in December and needs to find another 25 billion euros, according to a Moody’s Investors Service estimate, if the deficit goal remains unchanged.

Rajoy said he will present the nation’s budget for 2012 on March 30.

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