SINGAPORE—Spain's Finance Minister Luis de Guindos said Friday that his government would need to implement an additional €35 billion ($46.20 billion) of fiscal tightening this year and next to achieve its budget deficit goal.
Speaking to reporters in Singapore, Mr. de Guindos insisted that circumstances in Spain and Greece were completely different, and said it was "total nonsense" to compare them.
Spain is funding itself "in very good conditions," he said, noting that it has already raised 45% of its 2012 borrowing requirements at lower cost, while lengthening its debt maturity.
The government is totally committed to fiscal adjustment and hitting its budget target, and will continue to implement budgetary consolidation and structural reforms, he added.
"If markets start to be confident of your ability to have public finances on a sustainable path, then your borrowing costs will start to reduce... and that will be positive for the rest of the country," Mr. de Guindos said, noting that markets would likely remain quite volatile.
Spanish bond yields have fallen steadily in recent months as the country's banks put excess cash borrowed from the European Central Bank to work in the domestic market.
But sentiment soured after the government said it would raise its 2012 fiscal deficit target to 5.8% of GDP, from an original goal of 4.4%. European Union objections later forced a tightening to 5.3% of GDP.
Spain's 10-year government bond yield Friday climbed 0.07 percentage point to 5.52%, a level not seen since January. Spanish bond yields are now again higher than similarly dated Italian debt.
To meet its budgetary goal, Mr. de Guindos said that just under €50 billion of tightening would be necessary during 2012 and 2013, which—taking into account the adjustment of €15 billion that was approved at the end of 2011—would amount to €35 billion over the two years.
Spain's deficit last year stood at 8.5% of the country's GDP, or close to €90 billion.
Turning to the budget due March 30, Mr. de Guindos said the government would concentrate tightening steps on expenditure, both at the central government and the regional level.
"All the regions have accepted the 1.3% [deficit] target for next year, and I think they will be able to do it," he said.
Asked about potential for downside to the government's projection of a 1.7% contraction in GDP this year, Mr. de Guindos said the forecast was already quite cautious.
"You're always dealing with something close to the worst-case scenario, and afterwards if the reality is better, I think that's positive in terms of confidence building," he said.
Mr. de Guindos was in Singapore to meet government officials and institutional investors, including sovereign-wealth fund Government of Singapore Investment Corp. and government-backed investment company Temasek.
wsj.com
Speaking to reporters in Singapore, Mr. de Guindos insisted that circumstances in Spain and Greece were completely different, and said it was "total nonsense" to compare them.
Spain is funding itself "in very good conditions," he said, noting that it has already raised 45% of its 2012 borrowing requirements at lower cost, while lengthening its debt maturity.
The government is totally committed to fiscal adjustment and hitting its budget target, and will continue to implement budgetary consolidation and structural reforms, he added.
"If markets start to be confident of your ability to have public finances on a sustainable path, then your borrowing costs will start to reduce... and that will be positive for the rest of the country," Mr. de Guindos said, noting that markets would likely remain quite volatile.
Spanish bond yields have fallen steadily in recent months as the country's banks put excess cash borrowed from the European Central Bank to work in the domestic market.
But sentiment soured after the government said it would raise its 2012 fiscal deficit target to 5.8% of GDP, from an original goal of 4.4%. European Union objections later forced a tightening to 5.3% of GDP.
Spain's 10-year government bond yield Friday climbed 0.07 percentage point to 5.52%, a level not seen since January. Spanish bond yields are now again higher than similarly dated Italian debt.
To meet its budgetary goal, Mr. de Guindos said that just under €50 billion of tightening would be necessary during 2012 and 2013, which—taking into account the adjustment of €15 billion that was approved at the end of 2011—would amount to €35 billion over the two years.
Spain's deficit last year stood at 8.5% of the country's GDP, or close to €90 billion.
Turning to the budget due March 30, Mr. de Guindos said the government would concentrate tightening steps on expenditure, both at the central government and the regional level.
"All the regions have accepted the 1.3% [deficit] target for next year, and I think they will be able to do it," he said.
Asked about potential for downside to the government's projection of a 1.7% contraction in GDP this year, Mr. de Guindos said the forecast was already quite cautious.
"You're always dealing with something close to the worst-case scenario, and afterwards if the reality is better, I think that's positive in terms of confidence building," he said.
Mr. de Guindos was in Singapore to meet government officials and institutional investors, including sovereign-wealth fund Government of Singapore Investment Corp. and government-backed investment company Temasek.
wsj.com
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