Spain's 2016 Budget Is Missing $22 Billion, Ciudadanos Says

  • Rajoy overestimating social-security revenue, Roldan says
  • EU says Rajoy will miss budget targest this year and next

The 2016 budget that Spanish Prime Minister Mariano Rajoy rushed through ahead of December’s election overestimates government revenue next year by about 20 billion euros ($22 billion), according to Ciudadanos, the pro-market party that may hold the balance of power in the next parliament.

The government projects that social security revenue will jump to about 117 billion euros in 2016 compared with about 98 billion euros in 2015, an increase not justified by the government’s 3 percent growth forecast, according to Antonio Roldan, an economic policy adviser running for parliament on the Ciudadanos ticket. There are other anomalies in the forecasts for income and corporate tax revenue, Roldan, formerly an analyst with Eurasia Group in London, said.

“There is a hole,” he said. “I don’t know how it will be filled. There will have to be some adjustments.”

The European Commission raised its own concerns about Rajoy’s budget projections this month, forecasting the deficit will come in at 3.5 percent of gross domestic product compared with a target of 2.8 percent.

Ciudadanos’s plan to rein in the shortfall involves reducing the overlap between different levels of public administration, merging city halls and eliminating provincial level governments, said Roldan. The party would also consider eliminating corporate-tax deductions.

With neither Rajoy’s People’s Party nor the Socialists within reach of an outright majority, Rivera’s party may be the first-choice partner for a governing alliance after December’s ballot. A Telecinco poll of 1,800 people published Tuesday put Ciudadanos in third place at 18 percent compared with the PP at 27 percent and the Socialists at 24 percent. Podemos, the ally of Greek Prime Minister Alexis Tsipras, dropped to fourth place with 16 percent.

Before it's here, it's on the Bloomberg Terminal.