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Virginia Mayo/AP

Spain 'will ask for an extra year to meet EU's budget targets'

A source tells AFP that Spain will ask for the same concession that was given to Ireland – an extra year to meet deadlines.

CRISIS-HIT SPAIN wants the European Union to ease the country’s deficit target for 2013 to around 6.0 per cent of GDP, from the original target of 4.5 per cent, a government source has said.

Madrid also wants the EU to agree to give Spain an extra year to bring its deficit to below the bloc’s maximum threshold of 3.0 per cent of gross domestic product, the source added.

“It will be in that range,” the source said when asked about Spanish media reports that Spain was seeking to ease its deficit target for 2013 to 6.0 per cent.

Spain is expected to present its Stability Programme for 2013-16 – an outline of how it will comply with European budgetary rules which will include deficit and economic growth forecasts – to the EU next month.

A similar one-year extension has previously been offered to Ireland, which originally presented a four-year programme to comply with the 3 per cent rule by 2014. The deadline was extended to 2015 when the Fine Gael-Labour coalition entered office.

Last week the country posted a 2012 public deficit of 7.0 per cent, up from the 6.7 per cent figure for the year it originally announced in February and above the 6.3 per cent target it agreed with the EU.

Spain recorded a public deficit of 9.4 per cent in 2011.

The government’s original deficit target of 4.5 per cent in 2013 and 2.8 per cent in 2014 are considered unrealistic by most analysts.

The Spanish economy, the eurozone’s fourth biggest, contracted by 1.4 per cent last year – the second worst annual slump since 1970 – and the Bank of Spain predicted last week that it will shrink by 1.5 per cent this year before posting a “modest rebound” in 2014 with growth of 0.6 per cent.

Prime minister Mariano Rajoy’s conservative government had predicted output would contract by a more modest figure of 0.5 per cent this year and grow by 1.2 per cent in 2014 – but last month it said it would have to revise its forecast.

El Pais reported Friday that the government’s new forecast saw the economy contracting by 1.0 per cent this year but the government source declined to “confirm any figure”.

- © AFP, 2013

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