Spain fends off finance critics ahead of elections

GMT 06:35 2015 Wednesday ,14 October

Arab Today, arab today Spain fends off finance critics ahead of elections

Spanish Prime Minister Mariano Rajoy
Madrid - AFP

Spain's government was forced to defend itself Tuesday against claims it polished its outlook for its recovering public finances ahead of a general election.

EU officials warned last week that the conservative administration's public deficit targets in its 2016 budget were over-optimistic.

Critics accused it of electioneering by rushing out the budget ahead of December's election. They warned the plan could mean billions more euros of spending cuts.

The government went on the defensive, vowing it would keep its promise to lower the deficit to within EU limits next year.

Prime Minister Mariano Rajoy told reporters in New York: "I am very confident, and the Spanish people are too, that we are going to meet the deficit."

Finance Minister Luis de Guindos said on Tuesday: "I am convinced we are going to meet the Spanish government's budgetary forecasts" for a deficit of 4.2 percent of GDP this year and 2.8 percent for 2016.

"According to the latest data we have, revenues are growing more than we had estimated in the budget," he added, in a speech in Madrid on Tuesday evening.

He said the government hoped to save 8.5 billion euros ($9.7 billion) this year thanks to improved tax revenues and other factors.

Industry Minister Jose Manuel Soria in a television interview earlier openly denied claims that the government's strong forecasts were merely designed to give it a boost ahead of the legislative polls on December 20.

Spain's conservative government has made tens of billions of euros in spending cuts over recent years which it said were necessary to drag the country out of an economic crisis.

But the EU finance commissioner Pierre Moscovici said Spain's latest forecasts are "a bit optimistic". The European Commission asked Spain to draw up a new budget programme.

The commission forecast Madrid would record a public deficit of 4.5 percent of gross domestic product this year and 3.5 percent in 2016 -- still above the three-percent limit set in EU treaties.

- Rivals say PM 'desperate' -

Rajoy is fighting for re-election on his economic record.

The government presented its budget plan in August, without waiting for December's general election, which polls show could produce a change of leadership.

Spain's economy started to recover from years of on-off recession in 2013. The government forecasts it will grow by 3.3 percent this year. But the unemployment rate is still extremely high at over 22 percent.

Rajoy's opponents claim his budgeting of income tax cuts and the restoring of public workers' bonus payments that were cut in the crisis were pre-election gestures.

The main opposition Socialist Party on Tuesday called for Rajoy to answer questions in parliament about the deficit concerns.

"Rajoy is desperate before the elections and has presented false budget plans," the Socialists' leader Pedro Sanchez said in a Twitter message.

In separate televised comments, he accused Rajoy of "lying to the Spanish people".

He said the government's reforms would leave a 10-billion-euro hole in the accounts.

The influential left-leaning tax inspectors' union Gestha said that the government would have to make up to three billion euros' worth of "hidden spending cuts" before the end of this year.

"This is the first time the budget has been presented early due to the calling of elections. It is strange," the president of GESTHA, Carlos Cruzado, told AFP.

"From our point of view it wasn't the best moment for those tax cuts," he said.

"The government will not be able to implement this whole budget in the two or three remaining months of this year," so the job will fall the government that emerges from December's election, he said.

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