Spain seeks EU recognition for fiscal efforts

Spain hopes Brussels will recognise the country's efforts to bring its budget under control in a Eurogroup meeting on Monday, and not does expect to be penalised for missing a 2012 deficit target.
Spain rankled the European Commission and fellow member states this month by saying it would miss a 2012 deficit goal agreed with Brussels, undermining the credibility of a fiscal pact binding member states to strict budget control.
Economy Minister Luis de Guindos denied in a newspaper interview on Sunday that Spain had defied European Union guidelines, and said Europe had been well briefed on the slippage in the 2012 target.
"There has certainly not been any challenge here. Spain is a loyal member firmly committed to European fiscal rules," he said in the interview with ABC newspaper.
"I am sure that in the Eurogroup meeting tomorrow there will be recognition that Spain is making a huge effort to cut budget costs and that it is fulfilling obligations."
Spain's slippage on the 2012 target has brought the euro zone's fourth-largest economy back into focus for concerned investors, with the country's borrowing costs outpacing those of Italy for the first time in months.
Spain does not expect sanctions from the European Commission as punishment for missing the 2012 target, and the 2013 deficit goal of 3 percent of gross domestic product (GDP) will be met, a senior government source said.
"I hope there will be a statement (at the Eurogroup meeting) saying that Spain complies with EU rules, is preparing well for 2012 and is working and collaborating with the Commission," the source said. "And I hope we'll stop talking about Spain."
Spain is a test case of whether Europe is willing to ease demanding fiscal constraints on member states that lead to more spending cuts in economies struggling with anaemic growth and high employment.
It already plans around 30 billion euros ($39 billion) of cuts this year, strangling investment in an economy which is probably already in recession and has the highest unemployment rate amongst developed nations.
Hopes that Spain may get the support of other member states in its quest for leniency look ill-founded, given that other countries with the same difficult situation, such as Belgium and the Netherlands, have not asked for rules to be relaxed.
The centre-right government of Prime Minister Mariano Rajoy took over from a Socialist administration late last year.
Some at the European Commission suspect the new government inflated its deficit forecasts for 2011 to pass blame on the previous administration and allow it to make fewer cuts this year, sources have told Reuters.
De Guindos denied any massaging of the figures in the newspaper interview.
"The government has not inflated figures, the Spanish statistical data are not faulty," he said.
The 2011 deficit came in at 8.5 percent, overshooting a 6 percent target. Rajoy announced a 5.8 percent target for 2012 on March 2, against the 4.4 percent EU-agreed goal.