Monday, March 5, 2012

EU's Barroso says sure Spain will honor commitments

European Commission President Jose Manuel Barroso said today he was confident Spain would fulfill its EU budget discipline commitments despite setting itself a softer 2012 deficit target than originally planned.

Addressing reporters during a visit to Vienna, Barroso said the Commission had not yet seen Spain's 2012 budget and needed more information about the "slippage" Madrid had in 2011 so he could not comment in detail.

"I have no doubts that the government will honor its commitments with respect to the stability and growth pact," he added.

Spain's new 2012 budget target is easier than originally agreed under the euro zone's austerity drive, putting a question mark over the credibility of the European Union's new fiscal pact.

Prime Minister Mariano Rajoy insisted he was acting within EU guidelines because the plan was still to hit the European Union public deficit goal of 3 percent of gross domestic product (GDP) in 2013.

Spain's new 2012 target of 5.8 percent of GDP was more realistic than the original 4.4 percent goal but still demanding, he said last week.

The gambit will force the EU to decide whether to punish Spain for missing the initial target. Barroso noted that Rajoy had signed the EU's new fiscal pact on Friday and added: "I am sure that Spain will honour its commitments to financial and budgetary stability."