New government vows to stick to deficit target

pulse

November 4, 2016 3:35 PM

"All of the variables analysed by the economy ministry as well as the finance ministry point in this direction," he added.

Newly-reelected Spanish Prime Minister Mariano Rajoy (C) kept Luis de Guindos as economy minister and Cristobal Montoro as finance minister

Madrid has vowed to reduce its deficit from 5.1 percent of gross domestic product (GDP) in 2015 to 4.6 percent this year and 3.1 percent in 2017.

"We are confident that we will meet the goal of 4.6 percent of GDP and of 3.1 percent for next year," government spokesman Inigo Mendez de Vigo said after the first cabinet meeting of Prime Minister Mariano Rajoy's new government.

Rajoy's caretaker government had sent a draft 2017 budget to Brussels which included a forecast that the public deficit would come in at 3.6 percent next year.

But the European Commission ordered Madrid to lower the deficit down to 3.1 percent, which will require roughly 5.5 billion euros ($6.1 billion) in budget cuts.

Rajoy, in power since December 2011, kept Luis de Guindos as economy minister and Cristobal Montoro as finance minister in his new cabinet which he presented Thursday.

His conservative Popular Party won a parliamentary confidence vote on october 29, taking power after two indecisive elections that led to 10 months of political paralysis.

But this time around Rajoy will have a minority government. With just 137 lawmakers out of 350 in the lower house on his side, it will be hard for him to win approval for austerity measures.

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