Please consider this Google Translation from the Guru'sBlog Spanish Economic Drama, Over Half Federal Budget Devoted to Pensions, Unemployment and Interest
Today the Minister of Finance and Public Administration, Critobal Montoro, has submitted to Congress the 2012 State Budget , and I am frightened by the huge numbers that are involved in pensions, unemployment and interest.Spain Warns of Soaring Debt
37.1% of total state budget will be allocated to pension payments, 9.2 % for unemployment benefits , while another 10.5% will go to interest payments (28.848 million euros, equivalent to 2.7% of GDP.
In all, these three items account for 56.8% of total State Budget 2012.
The AP reports Spain Warns of Soaring Debt as Unemployment Rises
Spain said Tuesday its national debt will spiral sharply higher this year as data showed unemployment hit a record high in March, complicating efforts to stabilise the country's strained finances.Spanish unemployment is up for the 8th consecutive month and may soon top 25%. Moreover, revenues will drop substantially.
Budget Minister Cristobal Montoro said borrowings of 186.1 billion euros ($248 billion) this year will take the debt-to-GDP ratio to 79.8 percent from 68.5 percent in 2011, well above the EU 60 percent limit.
"Spain is a critical situation. That is what we're trying to address," he told a news conference after delivering the conservative government's cost-cutting budget for 2012 to parliament.
Adding to the strain on public finances, the number of people out of work rose for the eighth straight month in March as Spain headed back to recession with the economy expected to shrink 1.7 percent this year after expanding 0.7 percent in 2011.
The number of workers registered as without work climbed 0.82 percent from February to 4.75 million, the highest figure since the current statistics series began in 1996, the labour ministry said.
The 2012 budget -- approved by the cabinet on Friday -- includes 27 billion euros in tax increases and spending cuts aimed at slashing the annual public deficit to 5.3 percent of output this year from 8.5 percent last year.
It closes tax loopholes and rebates for large companies and freezes wages of public sector employees but spares jobless benefits and pensions amid growing public anger at the dire economic situation.
There is no way Spain can meet its deficit targets.
In response, Brussels will soon be demanding cuts in pension benefits. More violence is right around the corner.
Mike "Mish" Shedlock
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