Regional debts almost touching annual limit

The regional governments closed the first half of the year with an accumulated deficit of 1.2 percent of GDP - one decimal point away from the Zapatero administration's goal of meeting a 1.3-percent figure by the end of the year, Economy Ministry Elena Salgado said Thursday. Salgado announced that she will meet separately with the premiers of the 12 most indebted regions next week to ask them to tighten their belts so that the government can meet its objective and calm the markets.

"The government will meet its target, both at the national level and in the regions," she said, urging administrations around the country to implement the measures enshrined in a financial stability plan, which was signed by all premiers except the leaders of Castilla-La Mancha and Catalonia.

Castilla-La Mancha's deficit surpasses four percent of its GDP and the deficits in Extremadura and the Balearics stand above two percent.

On whether the government plans to raise taxes - specifically to reintroduce wealth tax as announced by the chief of the prime minister's office, Ramón Jáuregui - or make additional cuts to meet the deficit target, Salgado did not rule out possible modifications in taxation laws. However, she said there would not be any more cuts in spending.

"At the central government level, there is no measure expected in terms of spending, neither today nor tomorrow. In terms of revenue, again, there is no proposal expected neither today nor tomorrow," she said.

But if the government should decide to reintroduce the wealth tax, Salgado said her ministry will have the decree prepared in a matter of hours.