World Economy

Spain Asks EC to Forgo Deficit Fine

Spain Asks EC to Forgo Deficit Fine
Spain Asks EC to Forgo Deficit Fine

Acting Prime Minister Mariano Rajoy has asked the European Commission to waive a fine that could be imposed on Spain for missing its deficit target in 2015, El Pais newspaper reported.

Citing a letter sent to Commission President Jean-Claude Juncker, El Pais said Rajoy had stressed Spain’s efforts in the past four years to halve the public deficit, and offered up additional measures to control spending next year, Reuters reported.

A commission spokeswoman confirmed it had received a letter from Spain and would study it. A source with the Spanish government said the letter contained information that had already been sent to Brussels on Spain’s latest plans to bring the deficit down.

The commission is in charge of policing the budgets of the EU’s 28 members to make sure they improve each year in line with recommendations set by finance ministers.

The rules were sharpened in 2011 to make financial sanctions for rule-breakers more automatic and harder to circumvent through political alliance-building as had happened in the past.

Spain missed its 2015 target of cutting the deficit to 4.2% of gross domestic product, after overspending by regions and a social security revenue shortfall pushed it up to 5%.

The commission is considering penalizing Spain as well as Portugal for missing their goals. Officials have told Reuters the fines—which would be unprecedented—could be symbolic and be set at 0% of GDP, though even that would ramp up political pressure.

Spain’s deficit tussle comes at a sensitive time for Rajoy’s acting center-right government, which faces a second election in six months after an inconclusive ballot last December which stripped the People’s Party of its majority.