Spain Revises 2016 Deficit Target Up

Spain has raised its public deficit target this year from 2.8 percent of GDP to 3.6 percent, the economy ministry said Tuesday, meaning it will once again overshoot the limit demanded by Brussels.

The government already missed its target last year, with the country's public deficit coming in at 5 percent of gross domestic product, far higher than the 4.2 percent initially predicted by the ruling conservatives.

This was the eighth consecutive year that Spain overshot its fiscal target, making it one of the worst performers in the eurozone.

Economy Minister Luis de Guindos is due to present Madrid's new economic and budget forecasts to parliament later on Tuesday, but a source at the ministry who refused to be named revealed key data earlier in the day.

Madrid has promised the European Commission that it will do its utmost to reduce the deficit, and has already announced two-billion-euro ($2.3-billion) spending cuts to try and deal with it.

But according to economists, Spain needs to save some 25 billion euros in order to respect EU rules stating that the deficit in nations that use the euro should not exceed 3 percent of GDP.

Spain has blamed its 2015 fiscal slippage on extraordinary measures like the need to fund an expensive new treatment for hepatitis C, a yawning social security deficit and overspending by regional governments.

According to the data revealed by the economy ministry, Spain's public debt this year will come in at 99.1 percent of GDP compared to 99.2 percent in 2015.

Unemployment, meanwhile, is expected to drop below 20 percent this year, which will still make Spain one of the worst performers in the eurozone after Greece.

Already on Saturday, De Guindos lowered growth forecasts for the year from 3 percent to 2.7 percent.