Following a meeting with the leaders of the semi-autonomous regional governments, Budget minister Cristobal Montoro said that all the administrations are committed to reducing the public deficit.
There was agreement from 14 of the 17 regions to respect a deficit target of 1.5% of GDP for 2012. Sr. Montoro said the government has the means to force the three no-voters to comply. They were Andalucía, Catalonia and the Canary Islands.
Prime Minister Rajoy has controversially increased Spain’s deficit target from 4.4%, set by the European Commission, to 5.8% of GDP, in a decision made without consulting any other Euro leaders, or the commission itself.
Spain’s semi-autonomous regions control over a third of total public spending, including health and education. Last year they missed their target of 1.3%, more than doubling it to 2.9%, adding to Spain’s total of 8.5%, which was 2.5% above the EU target.
Spain is now on the brink of a second recession and Rajoy is urging his regional leaders to comply in order to help the country back to financial stability.
“No one should be lazy when it comes to correcting deficits because it means sending the wrong message to everyone, to the citizens of each region and to the investors funding it,” Montoro said.
The government’s main budget is due at the end of this month and will be “very austere” and a “reference” for all regions to follow suit in reducing their own budgets.
The new budget stability law, approved this month, gives the government the power to pressure all regions to comply with deficit reduction targets. Montoro said that no region would receive funds to clear unpaid bills unless its budget plan is approved by the central government.