In yesterday's meeting of national and regional government heads, speakers pointed out that the most regions missed their deficit goals in 2012. Catille-La Mancha, Cantabria and Navarra surprised everyone by joining five other regions that failed to balance their annual budgets.
Now, what are the repercussions of not making budget again in 2013? If the regions fail to meet their goals as in 2012 -- the target was 6.5% and they hit 7% -- Spain will continue to embarrass itself and disappoint its supporters, including Angela Merkel, who just yesterday praised Spain and Ireland for their efforts to bail out their respective economies.
Despite the cutbacks that have been made, it will still be hard to make budget. This is what the Finance Ministry and economic experts warned, although now the situation is even direr and an express cutback plan is in the works. Until now, neither Finance nor the regional governments have not worked hard or smart enough.
Yesterday Finance reinstated the Patrimonio tax, which taxes a consumers total net worth, even though Madrid voted against the decision, which will be a small patch, not a lasting decision. An unbalanced budget will slow the recovery and loan granting. If either is to improve, Montoro can't approve any more excess spending.
