Spain will meet its 2012 budget deficit goal of 6.3 percent of GDP as the central government’s shortfall in the nine months through September was 3.9 percent, Budget Minister Cristobal Montoro told lawmakers today in Madrid.
Spain can report whatever numbers it wishes, but it’s budget deficit will not be 6.3% of GDP this year.
The 3.9% figure through September is fictitious. For the first six months of the year, the deficit was 4.04%. The only way the new number can be accurate is if Spain showed a surplus in the 3rd quarter. With an imploding economy shrinking at a 1.7% annual rate, this is very unlikely.
I have been following the Spanish situation for quite some time. Spain’s budget numbers were worsening all year, but through magic they have seemed to reverse course and improve. Here is my post on the subject from August, if you care to check the history of Spanish budget deficit projections.
Spain is doctoring its numbers to enable Rajoy to play chicken with the ECB and EU. Europe needs Spain to request a bailout just as much as Spain needs the money.
It is no one’s interest to call Spain out on these numbers, because a panic may ensue. Hence, Europe stays mum. I do not understand why the mainstream media merely parrots whatever Spanish officials say without checking the facts.
Spain is in a lot of trouble and is moving from illiquid to insolvent in a hurry. The country will need to finance a lot of money between now and the end of the year: