MADRID (Reuters) - Spain will put forward a three-year plan to control central government spending, covering 2012-2014, when it presents a draft budget to Congress in the coming months, a government source told Reuters on Tuesday.
Spain is trying to control three areas of spending, at the central government level, the 17 autonomous regions and social security after missing the 2011 budget deficit target by a large margin. The deficit was 8.9 percent instead of 6.0 percent.
“The plan will define all the concrete measures to raise revenue and reduce expenses to be implemented by the central government in the medium term,” the source said.
Under Spanish law the government must present a medium-term fiscal stability plan when it misses deficit targets.
In addition, euro zone officials have said that Spain must present a detailed medium-term fiscal plan to convince policy makers and markets that it is on track to meet deficit cutting targets.
The European Commission will release on Wednesday country recommendations for all 27 European Union countries, including an assessment of Spain’s stability program, which was submitted to the Commission in April and already contains measures to rein in this year’s public finances.
The central government missed its 2011 deficit target of 4.8 percent of gross domestic product by 3 decimal points, while the autonomous regions missed their target by a much wider margin.
All regions submitted medium-term fiscal stability programs earlier this month, and they were approved by the central government apart for the tiny north-western region of Asturias.
In compliance with Spain’s fiscal stability law, which was adopted in line with the European Union fiscal stability pact, the plan will explain the underlying causes of the breach of the deficit or debt targets, economic forecasts and risk scenarios, the government source said.
Editing by Julien Toyer and Tim Pearce