Spanish government to propose limits on regional budgets

Spain's central government will propose setting a limit on the budgets of the the country's powerful regional governments, Prime Minister Jose Luis Rodriguez Zapatero said Tuesday. The measure will be proposed next month and it aims to "guarantee fiscal sustainability in the mid term", he told parliament during an annual state of the nation debate. Spain's regional government debt is a major concern for the markets which fear it could compromise the central government's goal to cut the annual public deficit. The Spanish government aims to reduce the public deficit to less than six percent of gross domestic product in 2011 before bringing it below the EU's three-percent ceiling in 2013. While the central government managed to cut the deficit from 11.1 percent of GDP in 2009 to 9.24 percent in 2010, the regions pushed up their deficit from 1.92 percent to 2.83 percent in the same period.