Spain to get an extra year to reach budget deficit target

Spain will be granted an extra year to reach its budget deficit target of 3%, a decision which should be confirmed officially tomorrow.

The European Commission is expected to propose tomorrow a new deficit goal of 6.3% of economic output for 2012, 4.5% for 2013 and 2.8% for 2014.

The initial target to reduce the deficit to 3% was set at 2013, but eurozone finance ministers have agreed that the troubled economic situation of the country has made this target out of reach.

According to a draft agreement published by press agencies, Spain would have to adopt new austerity measures for 2012 to meet this year’s target and that the Spanish government would have to stand ready to adopt further measures should risks to the budgetary plans materialize.

Spain would also have to report every three months on its progress in meeting the goals. According to the document, Spain’s budgetary position has deteriorated substantially over the last few months, mainly due to a sharper than expected economic slowdown.

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