Spain will pay more for interest on debt that will accomplish adjustment

03.04.2012 M. G. Mayo / M. Castillo / B. Amigot / D. Bravo   (Fuente EXPANSION )

The bill for interest on debt is a drag on Spanish accounts. The 28.848 million euros earmarked for funding this year than the setting of 27,300 million of the Budget, which is the biggest ‘snip’ of democracy. The finance minister, Cristobal Montoro, has led the Congress of Deputies of the State General Prespuestos 2012, which has said it is “extraordinary” and “respond to the serious economic times being experienced by Spain”.

Montoro, who delivered first thing the ‘yellow book’ the chamber president, said that the main actions of these accounts are being implemented since January. Their goal, as explained, is “to meet the target set by European commitments” and “restore confidence” about the country.

In addition, the finance minister explained that the accounts “not harmful” and “do not harm the essence of economic recovery.”

Thus, it gives way to the parliamentary proceedings of the General State Budget, which entail an adjustment of 27,300 million euros, the largest democracy. The first ‘Yellow Book’ by Mariano Rajoy ministry includes deep cuts and any changes to corporation tax and a tax amnesty, among other measures.

Baselines
Public accounts contained a total fiscal consolidation effort of 27,300 million for the deficit of central government to 3.5% of GDP this year (5.3% of GDP for general government). The PGE leads to a sharp reduction in spending and a series of tax measures included in an executive order accompanying the accounts.

The Executive is expected that the level of public debt reached 79.85 of GDP this year, compared to 68.5% and above 60% set by the Stability and Growth Pact in Europe. Nevertheless, he is “90.4% below that recorded half the euro area,” said Finance.

Where are the hacks?
Twelve items have suffered a recortazo than 20%. These are the most prominent

Interest on this debt will involve an outlay of EUR 28.848 million for the state, representing a 5.3% (measured in terms of national accounts are 29.246 million), and a figure higher than the adjustment provided. The increase was “due to the evolution of public debt and financial market conditions,” says the document.

The expected average interest rate for financing is 3.47%, up from 4.07% in 2011, and considers that the risk premium will remain above 300 basis points. In total outstanding debt this year will be 628,900 million, he estimates.

For its part, the low budget of the ministries on average 16.9%, reaching 65.803 million euros. The departments with a greater reduction in their budget are Foreign Affairs and Cooperation (-54.4%), Building (-34.6%), Industry, Energy and Tourism (-31.9%) and Agriculture, Food and Environment (-31.2%).

Spending ax
Basic public services suffer an adjustment of 9.2%, social protection and promotion of 3.9% and in health, education and culture 13.1%, among others. Highlights the 5.4% cut in spending on unemployment benefits, although the Budget include a rise in unemployment to 24.3% in 2012 (compared to 21% on average in 2011). Secretary of State Budget said that the decline is because not all unemployed receive benefits.

It is also very sharp drop of 62% of the management of Social Security Administration and the 32.3% of policies related to industry and energy, for a total of 1,897.06 million euros.

RETAIL
44.2% of consolidated expenditure for the State Central, while 16.2% goes to autonomous bodies, 38.7%, Social Security, and the remaining 0.9%, for state agencies .

Social spending, falling by 4.3% this year, to EUR 175.382 million represents 56.2% of consolidated expenditure. In total, an adjustment is 7.908 million, more than one quarter of the total.

Also remarkable is cutting some current transfers (which together decreased by 8.6%) and 15.6% on the Public Service Employment, 74.2% of the Spanish Agency for Cooperation Internacinoal Development or the 11.6% for scholarships and grants for students. Likewise, for
the provision of housing policy and the promotion of the building, which stood at 820.1 million euros, 31.7% less.

CCAA transfers to soar by 47%
Also in the chapter on central government transfers is remarkable growth spurt of 47.4% of the funding systems of the Autonomous Communities, to 21.806 million euros. As for the game to local entities increased by 10.9% compared to 2011 to 14.683 million.

Growing costs
In Chapter I of the yellow book, which corresponds to the cost of staff from government, is the increase of 0.7%, despite cuts in the public sector and freeze wages. In total, 33,151.53 million. In Central State, staff costs rose by 1.3%, mainly by rising pension liabilities of the classes (pensions), an increase of 7.9%.

In spending policies highlights the departure of financial and tax administration that fires a 271.6% to 5237.53 million and this increase is due mainly to the allocation of the contribution of Spain to the European Stability Mechanism for an amount of 3.809 million euros.

Revenues: EUR 12.314 million
On the revenue side, measures for exceptional tax (including raising the income tax passed in December) will be an amount of 12,314,000 euros.

The Government has introduced changes in corporate tax and in the Work of Snuff and has a free a tax amnesty for capital to return to Spain, or hidden within the country, you only need to pay a special tax 8% or 10%.

The Corporation Tax revenues will increase by 17.8% in 2012 over 2011, reaching 19.564 million euros, but VAT revenue will be reduced by 2.6%, reflecting the low rate of the Spanish economy to the 47.691 million.

Meanwhile, revenues from excise fall by 11.5% to 18.426 million euros, in which case influence “measure” the reduction of consumer goods subject to these charges, especially hydrocarbons, according to the project general State budget sent to Congress today.

Provided tax relief for 2012 will amount to 38,102.7 million euros, 5.6% less than in 2011, according to the bill State Budget presented today at the Congress of Deputies.

Stresses the 9.2% drop in personal income tax benefits, 1,528 million lower, due to the decreased number of respondents and income subject to tax.

With the tax amnesty the government plans to raise 2,500 million.

Overall, Montoro predicts revenues of 276,440 million, up 1.5% in 2011. Despite the slight overall increase, decrease by 41.6% the collection of indirect taxes and 2.9% of the direct. Finance explained that because “effect of the new system for financing the ACs in the state income tax.” In fact, the paper estimates a stretch of 244% of current transfers.

The text figure the net effect of tax reforms in an increase of 6.53%