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Government claims Spain's Deficit to Decline in 2010

Thu 4th Feb 2010

The cumulative budget deficit of Spain's national, regional and municipal administrations will be equivalent to 9.8% of gross domestic product in 2010, down from 11.4% of GDP last year, the central government said Wednesday.

That projection is included in the 2009-2013 Stability Program the Spanish government provided to the European Commission, the executive arm of the 27-member European Union.

Spain will gradually reduce its deficit-to-GDP ratio, meeting the EU target of 3% by 2013, the document says.

Sources in the Economy Ministry told EFE that the figures on regional and municipal deficits represent provisional estimates, as those levels of government set their own budgets.

The Stability Program also forecasts that Spain's ratio of total public debt to GDP will continue its upward trend, reaching 74.3% in 2012.

The Spanish debt-to-GDP ratio last year was 55.2%, compared with a median of 78.2% for the EU as a whole.

Spanish officials acknowledge in the document that the ratio of total public debt to GDP could grow as large as 77.7% by 2012 if interest rates rise by more than one percentage point.

In a related development, survey results released on Wednesday show Spaniards are becoming more upbeat about their own economic prospects and those of their country, where the unemployment rate is nearly 20%.

The Consumer Confidence Index, or ICC, stood at 78.7 last month, up four points from December and 28.6 points from January 2009. The index ranges from zero to 200, and a score above 100 is viewed as positive.

The figure indicates consumers believe the worst of the recession is over and that private consumption could rise this year in Spain, according to the Official Credit Institute, which surveys 1,000 adults nationwide to compile the ICC survey.

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