Spain's deputy Prime Minister Soraya Saenz de Santamaria, Finance Minister Luis de Guindos, and Budget Minister Cristobal Montoro explained the country's 2013 budget at a press conference that followed a Council of Ministers meeting that ran late towards the end of Thursday's European trading session.

The ministers stressed the point that more adjustments were made on the spending side than on the revenue side. The most important aspects of the budget are:

Revenue side

Revenue will increase by 3.8% to €175.177bn with the bulk coming from individual taxes (€74bn), corporate taxes (19bn), sales taxes (+13% to €54.6bn), and Special Taxes (+7% to €19.9bn).

Spending side

Average ministry spending will be reduced by 8.9% in 2013 to less than €40bn.

Public salaries will be frozen again.

The cost to finance public debt will rise by €10bn (+33%) to €38bn and the public debt to GDP ratio will pass 80% in 2013.

Social Security spending will rise 74% to €15.5bn.

Financing to regional administrations will fall 3% to €35.3bn.

Taxes

New taxes have been created in order to raise €4.375bn.

A new 20% lottery tax for winnings above €2,500 will raise more than €800m.

The wealth tax will be extended (€700m) and tax deductions for amortisations will be limited for large companies in 2013 and 2014 (€2.37bn).

Targets

The government is confident that it will reach the 2012 deficit target of 6.3% and 2013 target of 4.5%.

Pensions

Pension payments will rise by 1% and will remain adjusted for inflation.

The government has approved the use of €3.063bn from the pension reserve fund.

The government expects Spain's gross domestic product (GDP) to contract by 0.5% in 2013 and for the unemployment rate to rise slightly.


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