February 27, 2020 / 11:38 AM / a month ago

Spain's lower house backs government's new deficit targets

MADRID (Reuters) - The lower house of Spain’s parliament approved on Thursday the country’s new deficit targets for 2020-2023, the first major motion pushed through by the left-wing minority coalition government since it took over in January.

The vote opens a process that the administration hopes will result in the approval of its 2020 budget plan, after lack of a permanent government led to two years of rolling over the 2018 budget.

The bill still needs the approval of the Senate, but the coalition has more seats there.

This year’s deficit target of 1.8% of gross domestic product is Spain’s first deficit goal set after the end of the excessive deficit procedure last year. The European Commision had imposed the procedure a decade ago after the country was hit by the financial crisis.

The target is lower than last year’s estimated 2% deficit, but it diverges from a narrower gap trajectory agreed with the European Commission two years ago.

According to the new government plan, the deficit would then narrow to 1.5% in 2021, 1.2% in 2022 and 0.9% in 2023.

The plan was passed by 168 votes to 150 with 19 abstentions, including Catalan separatist party Esquerra Republicana, which in January helped get Socialist leader Pedro Sanchez confirmed as prime minister.

For the next four years, the administration will need the support of various smaller political groups in parliament to pass legislation, including the budgets.

The Catalan separatists accepted backing the Socialist-led coalition after it offered to hold a dialogue on the future of the restive region. The first official meeting in that format was held on Wednesday, on the eve of the vote on the deficit goals.

Reporting by Belén Carreño; editing by Andrei Khalip, Larry King

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