Brussels: The European Union's economic and monetary affairs commissioner said Friday that Spain may be given more time to reduce its budget deficit if it is shown to have fulfilled its structural fiscal obligations.
Provided the 2012 figures assure the European Union that Spain's structural effort is being implemented, the budget strategy could be adapted to reflect that this consolidation process will take more effort and more time, Olli Rehn said in presenting the 27-nation bloc's macroeconomic forecast for 2013 and 2014.
He said that "in the case of Spain, it seems that the structural fiscal effort has been undertaken and there has been also an unexpected shortfall of growth", meaning the Iberian nation meets both of the European Commission's conditions for allowing countries more time to cut their budget gap.
Rehn said the Commission, the European Union's executive arm, must "verify this in the coming weeks and months" to determine whether Spain should be given more time to bring its budget deficit down to less than 3 percent of gross domestic product in 2014, from 8.9 percent of GDP in 2011.
Spain's budget deficit came in at 10.2 percent of GDP in 2012, although excluding bank-recapitalization costs the total was around 7 percent, according to EC estimates.
Rehn said it is essential that Spain continue its belt-tightening measures to consolidate its economic recovery and create a sound basis for sustainable growth and job creation.
The Iberian nation is in recession for the second time since the 2008 global financial crisis followed hard on the heels of the collapse of a decade-long property boom.
Unemployment in Spain topped 26 percent at the end of 2012 and the jobless rate among people under 25 stood at 55.1 percent.