Spanish government eyes deal to pass first proper budget since 2016

By Belén Carreño
Spain's minority coalition government is increasingly hopeful parliament will approve the first full-year budget since 2016, with the centre-right opposition Ciudadanos likely to back the 2021 post-pandemic recovery plan, two Spanish government sources told Reuters.

A long period of political instability up until early 2020 when the leftist government took over meant that Spain had to roll over its budgets for most of the past four years, all but preventing public investment.

The last spending plan approved by parliament in mid-2018 only applied to the second half of that year.

"It is urgent, it is necessary, to approve a new budget," Prime Minister Pedro Sanchez said in a radio interview on Tuesday, adding that the old plan lacked tools to deal with the health emergency and deliver the 140 billion euros in EU recovery grants and loans to the sectors where they are needed.

Mr Sanchez will on Wednesday begin a round of meetings with the opposition parties focused on the budget.

The two government sources said they were optimistic that the 2021 budget bill would be approved this autumn, calling Ciudadanos "very open" to negotiation and not ruling out some budging to its demands on the tax front.

WELL SHORT OF MAJORITY
The Socialists and their hard-left allies Unidas Podemos have 150 seats in the 350-seat lower house, short of the 176 votes needed for a budget to pass.

Ciudadanos, which tumbled to just 10 seats in last year's election from 57 and is under new leadership, would be crucial to passing the plan, assuming that several small regional parties that have backed the government previously lend their votes again.

Ciudadanos leader Ines Arrimadas said on Tuesday she wanted to negotiate on next year's budget because her party wants to be "useful" to the country, though she added that the spending plan should "have the least Podemos ideology possible".

That could complicate the discussions within the government, kicked off by Budget Minister Maria Jesus Montero's meeting with Podemos representatives on Tuesday. Ms Montero said the government aims to have the proposal ready by the end of September.

A deal with Ciudadanos would also take the kingmaker role away from Catalan separatists whose support helped install the Sanchez government, for which he was heavily criticised.

The Spanish government has forecast economic growth of 6.8% next year after an estimated contraction of 9.2% in 2020, but is yet to outline the 2021 budget deficit target. [Reuters]