Bloomberg has been reporting on the Spanish budget deficit all year, so you would think that they would be in a position to verify the numbers being reported by the Spanish Finance Ministry. Alas, the news agency does not read its own articles, which show that Spain is fudging the numbers.
Ministry data showed the budget deficit being 4.37% through November. I wrote a post on the history of deficit reporting here
All of the cites for the numbers that I am sharing with you are in that post. I relied on Bloomberg for ALL of the numbers:
- The deficit was 4.04% for the first half of the year. http://www.bloomberg.com/news/2012-08-01/andalusia-challenges-spain-debt-caps-meant-to-deepen-budget-cuts.html
- Through July, the deficit rose to 4.6%. http://www.bloomberg.com/news/2012-08-31/catalonia-cut-to-junk-as-spain-bails-out-bankia-deficit-swells.html
- Then, the deficit only rises .17% through September to 4.77% in the midst of an economic depression with 25% unemployment. http://www.bloomberg.com/news/2012-10-29/spain-s-pain-seen-intensifying-as-slump-deepens-plight.html
- Since September, economic conditions have not improved despite rising exports, but Spain managed to run a surplus large enough to reduce the deficit .4% to 4.37%.
Somehow, Spain is massaging the numbers. In a few months, it will revise the 2012 budget deficit upwards while no one is looking.
In the meantime, keep in mind that the budget deficit does not include the cost of a €100bn bank bailout. Next year, Spain will have to sell many more bonds than is anticipated to cover this year’s larger budget shortfall, the increasing cost of the bank bailout and the financing needs of the regions.