The Minister of the Economy and Finance, Cristóbal Montoro, has proposed to Mariano Rajoy that Spain ask the EU to raise its deficit objective by one point for the 2012 fiscal year. As a result, the deficit would equal 5.4% of Spain's annual GDP instead of the current goal of 4.4%.
Montoro's reasons are the same as those he expressed in an interview published yesterday by the German newspaper Financial Times Deutschland. In the interview he conveyed his "uncertainty" about Spain's ability to comply with the current deficit objective that the EU set for this year.
"It would be great to meet the 4.4% goal, and that is what we want," Montoro assured. But immediately after he warned that "obsolete" growth predictions developed by Zapatero's government (Zapatero and his team predicted 2.3% growth for 2012) are less than current estimations from international organizations. These estimations augur a sharp contraction in the Spanish economy for 2012. On Thursday the IMF warned of a 1.7% drop in productivity.
Montoro said that France and Germany were not abiding by stability agreements. Still, doubts that Montoro expressed in the German newspaper are creating some unrest within the Spanish government. Vice president Soraya Sáenz de Santamaría attempted to dispel doubts by reiterating the government's earlier message that they cannot afford to abandon their 4.4% deficit goal.
