Finance

Government planning 8.5% increase in public spending

PALMA. ECONOMIA. El Govern aumenta un 8,5 % su previsiï¿½n de gasto para el aï¿½o de las elecciones.

Finance minister Catalina Cladera, presenting the initial spending budget on Friday. | r.l.

Majorca Daily Bulletin reporterPalma01/09/2018 00:00

The Balearic government has established its budget spending ceiling for 2019. There will be an increase of 8.5% to 4,434 million euros. The cabinet's agreement on this is the first step in the budget approval process. It is now subject to negotiation between the three parties of the "pact", Podemos included, and to parliamentary debate.

Finance minister Catalina Cladera, presenting the initial spending budget on Friday, justified the rise because of increased tax revenues to a total of 1,116 million euros. She once more said that there will be no change to any tax rates, but there are due to be some new deductions; these have yet to be determined. The increase will mean more social spending and more public investment.

The money that the government has at its disposal comes from three principal sources - state funding, largely through the financing system of redistributed tax revenues; the region's own taxes, such as the tourist tax; and borrowing. A further factor is the deficit. The government is allowed by Madrid to increase this from 0.1% to 0.3% in 2019, the equivalent of a limit of 65 million euros.

The spending ceiling, assuming it is ultimately approved by parliament, is the highest ever in the Balearics, but it doesn't include "financial" spending, i.e. payment of debt and interest. The total budget for 2018 was 5,008 million euros, of which just over 1,000 million went on this payment. So, the figure presented by the cabinet is not the final amount. The government's debt stands at 8,620 million euros. This year it will be able to reduce this by 180 million.