Spain has reached it budget deficit target of 3.5% of GDP. The problem is, Spain did it in 5 months, not 12. Via Google translate, Spain has Budget Deficit 36.364 Billion Through May.

The State had until May a deficit of 36.364 billion euros in national accounting terms, equivalent to 3.41% of GDP, representing an increase of 30.6% compared to 2.59% in the same period 2011. The figure almost touches the 3.5% target it has set the state for the entire year.

Secretary of State for Budget, Marta Fernandez Currás, said that Spain suffers from a weakness of the collection because it crosses the “worst” macro.

Executive forecasts are ending the year with a deficit target of 3.5% for the state and 5.3% of GDP for the whole of the government.

Regional Debt Not Included in Above Totals

My friend Bran who lives in Spain adds this explanation …

Clearly, Spain’s deficit is well off track . The primary difference between the “state” and the “whole of the government” is regional government debt.

There are two main components: State (3.5% objective) and Regional (1.5% objective). The Total Public Administration deficit, which is supposed to come in at 5.3% for the year, is a combination of the two (+ 0.3% from somewhere else). The current Regional figure is not given in the article, but it is likely to be not too far off 1.5% this year.

The government says that this situation is due to a drop in revenue.

Taxes Going Up, 456 Prescription Drugs Dropped

The debate now is over how much taxes will go up and what government services are dropped. Bran supplied a link to 456 prescribed drugs dropped from funding to save €440 million.

The Ministry of Health, Social Affairs and Equal propose a list of 456 drugs that may be excluded from public funding and, as calculated by the department led by Ana Mato, would be a net savings to the NHS of 440 million euros.

If approved this measure, the state will cease to provide 60% of these medications as usual and the citizen has to bear the full amount. These drugs also were free prescription for retirees, which from now on you should pay them.

How long before Brussels sends in a team of experts telling Spain what it needs to do? Three hours or three days?

Mike “Mish” Shedlock
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