The Minister of Finance and Public Administration, Cristobal Montoro

In national accounting terms, the Spanish State posted a deficit to June 2013 of 40 billion euros. This equates to 3.81% of GDP and is 8.2% lower than the figure recorded in the same period last year, when it stood at 4.15% of GDP. Tax revenue rose by 4.68%.

This State deficit figure includes expenditure on interest payments amounting to 13.98 billion euros, up 14.4% on the same period in 2012. When discounting the financial burden, the State posted a primary deficit of 26.02 billion euros – down 17% on last year.

The Minister for the Treasury and Public Administration Services, Cristóbal Montoro, said that the figures show how "the Spanish economy has reached a turning point and that, from now on, we face a different path in terms of regaining economic activity, strengthening our economic growth and achieving job creation which should all happen sooner rather than later".

He said that the public deficit reduction "lends strength to the changes taking place in our economy, which will see the end of the economic recession". The minister placed special emphasis on the growing tax revenue – up 4.6% – because "when tax revenue increases, it means an economic change is taking place in the country, there is clear improvement in the indicators, reason for which we can look forward with confidence and hope in being able to say that in the second half of 2013 that the recession will end in Spain".

The most significant figures – in national accounting terms – include those corresponding to the taxes levied on production and imports. With a total of 17.07 billion euros, they have risen by 16.3%. VAT has risen by 16.9% to 12.25 billion euros while the other taxes on production and imports have risen by 14.9%, due to the funds resulting from environmental taxation, the carbon tax and the special tax on hydrocarbons, on natural gas, fuel oil and diesel.

The current taxes on income and wealth amount to 20.15 billion euros, 3.6% less than in the first quarter of 2012. This decline is mainly due to the payment of tax returns from previous years resulting from appeal proceedings.

Property income amounted to 3.96 billion euros, with an increase of 61.1%. This increase was generated by both the interest from the Regional Liquidity Fund, which amounted to 530 million euros (no equivalent comparison in the previous year), and the dividends and shares in profits from the Bank of Spain, which posted an increase of 83.83% on 2012.

In the first half of 2013, non-financial expenses incurred by the State amounted to 89.53 billion euros – up 2% on the same period in 2012. This growth was influenced by increasing financial costs, pensions and transfers to the Social Security authorities.

When discounting those expenses over which the State has no room to manoeuvre (such as interest payments, pensions and transfers to the Social Security authorities – which include expenditure on unemployment benefits), non-financial expenses would have fallen by 3.8%.

At a total of 85.59 billion euros, current expenses rose by 1.7% while, at 3.94 billion euros, capital expenses rose by 8.6%.

The increase in current expenses is mainly due to the 14.4% increase in financial costs resulting from a greater volume of debt in circulation and a bringing forward of the State financing programme when compared with the previous year because of the low interest rates on debt.

The State payroll amounted to 9.8 billion euros. This is 1.5% lower than at June 2012 due to the limitation placed on the replacement of civil servants other than in those cases provided for by law.

Social benefits other than social transfers in kind rose by of 4.9% to a total of 6.1 billion euros. Of this amount, 5.91 billion euros correspond to civil service pensions (up 5.6%).

These increases were offset by the decrease in current transfers between public administration services, which, at 46.07 billion euros, fell by 3.1% on 2012 due to the lower transfers made to the regional governments. This was the result of both lower payments on account from the so-called Adequacy Fund (Fondo de Suficiencia) and fewer advance payments on account in the settlement of the regional financing system.

On the other hand, transfers to the Social Security authorities rose by 8.2% and other current transfers rose by 11.5% due to a 6.5% increase in the contribution to the EU when compared with the first half of 2012.

Capital expenses rose by 8.6% due to the 707 million euros of aid for investment – 330 million euros higher than in 2012. This was caused by the higher transfers to ADIF, which this year has taken on investments to improve the railway network and maintenance and administration of the infrastructure previously owned by the State.

Gross capital formation fell by 6.1%, with expenditure of 2.13 billion euros.

Filed under: http://www.theleader.info/article/40166/

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