Spain 2022 budget gap narrows more than expected

MADRID: Spain’s budget deficit narrowed to 4.8 percent of gross domestic product last year, official data showed Thursday, beating forecasts from the government which expects a further reduction this year.

“Spain has once again managed to respect its commitments,” Budget Minister Maria Jesus Montero told a news conference.

Her Socialist-led government had targeted with the European Union a budget gap of 5.0 percent in 2022, down from 6.7 percent in 2021.

The improvement in public accounts was due to higher tax revenues resulting from strong economic growth, Montero said.

Tax collection soared 14.4 percent in 2022 to 223 billion euros ($242 billion), which allowed the government to reduce the deficit even as it boosted social spending to help households deal with high inflation, the minister said.

Spain’s economy expanded by 5.5 percent in 2022, one of the highest rates in the euro zone, mainly due to a rebound in tourism following the end of pandemic travel restrictions.

Montero predicted the budget deficit will continue to narrow in 2023 even though the government expects growth to slow to 2.1 percent this year.

The government, which is facing a tight year-end general election, forecasts the budget deficit will come in at 3.9 percent in 2023.