EU Fines Spain $21M for Flawed Deficit Report

     (CN) – EU lawmakers slapped Spain with a nearly $21 million fine for ignoring signs that the state of Valencia fudged budget-deficit data subsequently sent to Eurostat.
     The European Commission launched an investigation into the data boondoggle late last year, eventually finding that auditors in Valencia had not reported health expenditures to the Spanish government over several years.
     This led Spain to underreport its own government deficit to the EU statistics entity known as Eurostat in March 2012, to the tune of $2 billion.
     The commission also found that although Spain immediately corrected the figures, it had also ignored years of reports by national auditors flagging Valencia’s faulty figures.
     This led the regulatory body to ask the Council of the European Union to fine Spain for manipulation of deficit data under a 2011 law aimed at better enforcement of budgetary surveillance in the euro area.
     On Monday, the council said it would fine Spain nearly $21 million. While this represents the first time a member state has been fined since the law took effect, the council said the punishment – which could have been as high as .2 percent of Spain’s gross domestic product or nearly $3 billion – should be reduced given the cooperation by Spanish authorities and the immediate correction of the figures sent to Eurostat.
     The council also noted the misreporting had “no significant impact” on the EU’s economic governance given its small impact on Spain’s deficit as a whole.

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