Palma.—Speaking yesterday after the presentation of next year's budget proposals at a government meeting in Palma, Minister Josep Ignaçi Aguiló explained that the budget figures for 2010 and 2011 had been the same because the previous Balearic government had rolled over public spending from one year to the next. “So spending for 2012 is to be 8.58 percent higher than both the preceding years,” he said, adding that having been approved by the government yesterday in its draft form, the budget will then go before Parliament on Tuesday, 8th November for final ratification.

Aguiló pointed out that the budget next year is weighed heavily in favour of repaying debts, reportedly left to the present Partido Popular government by the former Socialist coalition. “One in every five euros of the public spend will go to banks,” the Minister said. This means that 21.2 percent of the total budget will go to repaying debts. “It's a tight budget,” said Aguiló but we were determined to give full support to the Welfare State. He claimed that 80 percent of next year's spend will go on Health, Education, and Social Welfare. “This means,” he said “that 3 out of every 4 euros will be spent on social policy.” “But there's no getting away from the fact that we have been saddled with debt which has to be paid,” said Aguiló. He explained that the interest alone on regional debt was 105 million euros in 2010 but will rise to 212 million euros next year, an increase of 101.35 percent.

At the end of June last year, said Aguiló, the debt of the Balearic Islands with financial organisations totalled 4'561 million euros but he claimed that the deficit next year will remain within the 1.3 percent of gross regional product permitted by Central Government.

In terms of spending, said the Finance Minister, the most significant reductions will be made in capital transfers, investments and subsidies. He said that important savings had also been made in cutting down on what he described as “inflated” government staffing levels. “We have secured a 6.96 percent reduction in personnel costs,” Aguiló said.

The Minister said that income from taxation for the Balearic government has been calculated at 1'698 million euros. There is an added 449 million euros which will also go to the government after the conclusion of a financing arrangement set up in 2010 Aguiló said that in the event that taxation figures are not reached as predicted, or if a greater amount than forecast is secured, then appropriate credit adjustments will be made.

The calculated taxation figures do not include any sums due to the Balearics from Central Government or income from Inheritance Tax that the present Socialist government in Madrid has been keen to reimpose.

Aguiló said that his team had been particularly careful about not overestimating the amount that the Balearic government could expect in taxation next year, especially as a national budget is not yet available against which to make calculations.

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