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Deficit target goal adjusted due to bank bailout funds

Government admits that it won’t be able to meet its target of 6.3 percent of GDP

The government admitted on Saturday that it won’t be able to meet its deficit target goal of 6.3 percent of GDP this year because of the bank bailout money it is due to receive from Brussels.

Spain will close the year with a new adjusted deficit figure of 7.4 percent of GDP, government officials said, adding that the European Commission has not asked Madrid to make any new adjustments to downsize this figure.

According to the 2013 budget, which was officially presented to Congress on Saturday, Spain’s public debt is expected to rise to 90.5 percent in 2013 — its highest in a century.

An independent analysis performed by auditor Oliver Wyman, which was published on Friday, concluded that the Spanish banking sector will need additional capital of 53.745 billion euros to shore up balance sheets because of losses in the property markets.

“We wish that we didn’t have to conduct these operations but we have to heal the ailing banks to recover our credit,” said Finance Minister Cristóbal Montoro.

The minister said that there are indications that the billions of euros injected since 2010 by the government to help keep the banks afloat may never be repaid.