(Bloomberg) -- Spain’s new government is relaxing its budget targets as higher oil prices eat into the country’s growth projections.
Spain expects a 2.7 percent public deficit relative to gross domestic product this year, up from a previous estimate of 2.2 percent, Economy Minister Nadia Calvino told reporters in Brussels Thursday. She sees a 2019 deficit of 1.8 percent, up from 1.3 percent.
Despite the new assessment, Spain still expects to leave the corrective arm of the European Commission at the end of the year, which requires a deficit below 3 percent. Madrid’s previous estimates were based on oil prices at $67.70 dollars per barrel, according to the country’s stability plan, compared with an average of almost $72 over the last six months.
“We are moving in the clear direction of budget consolidation and fiscal discipline,” said Calvino, a former director general for budgets at the commission. “The Spanish government -- and we have been saying since the change of government -- is completely committed to budget stability.”
Earlier, the commission reduced Spain’s growth estimate to 2.8 percent in 2018 from 2.9 percent, citing an increase in crude prices and less favorable momentum for exports. That compares to the government’s forecast of 2.7 percent.
“We expect Spain to correct its excessive deficit this year,” Commission Vice President Valdis Dombrovskis told reporters in Brussels on Thursday. “The new Spanish government is clearly committed to this.”
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