The budget set the deficit at 5.4%
The Government approved on Saturday the General State Budget (PGE) for 2010, With a deficit of 5.4% for central government, three points less than previously forecast and expenditure cuts of 3.9%, representing an effort to contain spending on all non-priority items.
Salgado told most of the adjustment in employment has been done, but the rate of unemployment is 17.9% this year, In 18.9% in 2010 and 18.4% in 2011. “We hope that the measure does not exceed 19%,” he said, acknowledging, however, that, being an average, the rate may exceed this figure in some time next year.
In his view, the budget begins the road to rebalancing public accounts, but always under the condition of not removing the economic incentives and tax until the recovery is “bound”, as agreed yesterday the G-20 and as already highlighted the Ecofin. “Of course you are applying and good examples of this are the Budget,” he said.
It expects revenue to rise 21%
According to the figures, the revenue, after the transfer to local authorities, will reach 121.626 million euros next year, by 21.2% over the projected liquidation of 2009, while expenditures are set at 185,249 million euros, 3.9% less.
Of the 5810 million more revenue by tax increases about 2810 million will go to the local authorities. The other 3,000 million remain in the State during 2010 to reduce the deficit. This causes the expected state deficit now stands at 5.4% for 2010, three tenths less, and also in all public administrations, to 8.1%.
Asked about how he will get that revenue figure, Salgado said some measures implemented in 2009 will be offset, in part, in 2010, while the crisis will reduce its effects, allowing the collection of various taxes begin to recover next year, excluding VAT, which will down for loss of business profits.
On the expenditure item, reiterated that the limit is 185.249 million, slightly higher than that raised in the month of June, but said the government is failing in that month as approved by Parliament, because there just is approved a goal of deficit that follows after the spending limit.
Curbing spending
Salgado said that the fall of 3.9% should be compared with the cost eventually executed in 2009, rising at 16.898 million due to tax measures and additional items for social protection, especially to the unemployed to overcome the effects of the crisis.
In particular, said that personal spending will grow by 2.7% in 2010 due to salary increases of 0.3% for general government, 0.3% for the financing of pension plans for public employees, the freeze the salaries of officials and reducing the supply of public employment.
This increase was allocated mainly to the ministries of justice and home affairs and should not be both salary increases and a higher staffing to meet the modernization of justice.
Social spending is half of the expenditure
However, 51.6% of spending is allocated to social spending, 21% for transfers to other government, 6.3% R & D and infrastructure, 6.6% for the payment of debt interest , 6.2% to finance basic public services and the remaining 8.3% to other economic activities.
Salgado said that the budgets are based on the macroeconomic prepared in June by the Executive, which provides year fall of 3.6% of GDP for 2009 and 0.3% for 2010. In his view, the Government still agrees with these forecasts, as indicated by recent data.
Tags: Budget, Expenditure, G - 20, macroeconomics, Social spending
