New Year cheers! Spain has nearly halved budget deficit in 2010

Spanish Economy Minister Elena Salgado - Leading the Way

Spanish Economy Minister Elena Salgado – Leading the Way

Data released by Spain on Tuesday suggests the country has managed to almost halve its budgetary deficit in 2010, indicating that the country is well on its way to managing its public debt and avoid a sovereign debt crisis.

The government deficit for 2010 narrowed to €53.4 billion (£46.2 billion) on the back of higher value added tax (VAT), effected by the government in July 2010. Central budget deficit for 2009 was recorded at a staggering €99.79 billion.

The figure however, does not include pension and regional government deficits and equals to 5.1 percent of Gross Domestic Product (GDP).

Economy Minister Elena Salgado said in a press conference that central budget deficit was pegged at 9.2 percent in 2010, compared to the set target of 9.3 percent.

The latest announcement eases investor scepticism about Spain’s fiscal management capabilities further. The market was much relieved on Monday after the Spanish Government announced its plans to recapitalize its weak savings banks in an effort to stabilize its banking sector.

“To a large extent market doubts have now disappeared”, Ms Salgado said.

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