The Spanish government's promise to reduce income taxes will not prevent a reduction in the deficit, Finance Minister Cristobal Montoro said Tuesday.
Closing corporate tax loopholes and imposing environmental levies will offset the effect of the income tax cut, he said in an interview with The Wall Street Journal.
Although Spain is once again growing, it is facing "a more difficult battle than earlier crises" given that it has to increase income despite the fact that consumption remains weak.
Therefore, Montoro said that "the most vital thing" at this time is having tight control of the government's activities.
"The economic scenario just doesn't give us any leeway to boost government spending," he told the Journal. "Whatever stimulus we get, it will be financial, via monetary policy. My job is to keep cutting down debt in this economy."
In the interview, the minister also said that Spain's emergence from recession in recent months may allow the government to post a primary budget surplus - excluding debt payments - in 2015.
Montoro expressed optimism and reiterated that Spain's budgetary balance is on the way toward coming out of the red before that had been expected, something that - he said - would drive the Spanish economy and calm the fears that the debt might become unsustainable.
"Spain has to lower the deficit not just because the European Union rules say so, but also because Spain's main problem is its foreign debt," the finance minister said.
Montoro said that a lower deficit would improve the prospects for growth in an economy that came out of the nine-quarter recession in the third quarter of 2013 by posting growth of 0.1 percent. EFE