Staff Reporter
THE Balearic government approved the region's 2005 budget yesterday, which amounts to 2'587 million euros, an increase of 39.19 percent on spending for the current year.

Minister for Economy and Tax, Lluis Ramis de Ayreflor said that the budget increase is a direct response to the needs of the Islands in areas of Health, Education, and particularly Public Works.

Of the total budget figure, 11.58 percent has been allocated to Health; 8.93 percent to Public Works and 8.16 percent to Education, while other ministries will share the remaining 10.5 percent.

Ramis de Ayreflor claimed that the amounts “are historically related to the key problems facing the Balearics and are intended to counterbalance the reduced investment in the Islands planned by the new central Socialist government next year”.

The sizeable budget increase in the Balearics will mean that the Islands will have the largest deficit in its recorded history, 380 million euros (including the 60 million incurred by the Health service management organisation, Ibsalut). The aim is to guarantee spending on education, health and infrastructure.

Ramis de Ayreflor highlighted the fact that this year has witnessed the greatest ever investment in public funding, 351.7 million euros, an increase of 122 percent. “It's the highest increase in public spending in the history of the Islands” he declared. More than 50 percent of the percentage increase will be allocated to the Ministry of Public Works.

In terms of spending on regional public sector staff, the minister said that the amount allocated to personnel amounts to 521.85 million euros, an increase of 24.6 percent. He emphasised that 91 million euros will be allocated to staff in the field of education. In terms of funds set aside for public companies working for regional government, the budget figure climbs to 1'276 million euros, an increase of 360 million euros (39.2 percent). The most sizeable rises are linked to Ibsalut which will receive 237 million more than in 2004.

With regard to the cost of financing, the minister said that money set aside for the payment of interest amounts to 56.56 million euros (19.55 million euros more). Ramis de Ayreflor added that this increase embraces the possible rise in types of interest and the payment of interest through the financing of the new deficit.

The budget figure for capital transfer has increased by 2.6 percent to reach 266.3 million euros. Ayreflor signalled that direct taxation forms 10.79 percent of governmental income in 2005, and indirect taxation, 60.14 percent. Remaining income is sourced from heritage funds, rates, capital gains and financial liabilities.

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