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Spain's PM vows to cut deficit
Source: Agencies |
December 20, 2011, Tuesday
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WARNING that very hard times lie ahead for Spain, the country's next prime minister said his incoming conservative government aims to reduce the country's deficit by 16.5 billion euros (US$21.6 billion) next year.
In a keenly awaited speech yesterday to Parliament a month after being elected and then keeping largely silent over his plans, conservative Mariano Rajoy still did not specify what bitter cocktail of spending cuts or tax hikes might be used to get the deficit down to Spain's stated goal of 4.4 percent of GDP in 2012.
The deficit was 9.2 percent of GDP last year and estimated by the outgoing Socialist government to be about 6 percent his year - a figure Rajoy suggested may be too optimistic. This is because the economy posted no growth in the third quarter. That stagnation prompted the outgoing Spanish government to join the European Union, the International Monetary Fund and many private economists in lowering its growth estimate for this year from 1.3 percent to 0.8 percent.
Rajoy said Spain's staggering jobless rate had risen to around 23 percent overall and around 46 percent for people under 25. "The panorama could not be more somber."
Spain's overall national debt stands at 706.34 billion euros as of the end of September. That is up 15 percent from a year ago. The new figure is about 66 percent of GDP - but it does not include the substantial debts of Spain's 17 autonomous regions.
Outlining his economic plans, Rajoy, to be sworn in as premier today, said he would end a freeze on cost-of-living adjustments for pensions, but said besides that every category of government spending is now subject to review.
Spain's economy was hit after the 2008 credit crunch exposed a real estate bubble. Now borrowing costs are soaring for the eurozone's fourth-largest economy, and Spain is often cited, along with Italy, as the next country that may have to join Greece, Ireland and Portugal in accepting a bailout. But Spain's economy is larger than those three nations combined and considered too big for Europe's rescue fund to handle.
Rajoy's Popular Party won the November 20 elections by a landslide.
In a keenly awaited speech yesterday to Parliament a month after being elected and then keeping largely silent over his plans, conservative Mariano Rajoy still did not specify what bitter cocktail of spending cuts or tax hikes might be used to get the deficit down to Spain's stated goal of 4.4 percent of GDP in 2012.
The deficit was 9.2 percent of GDP last year and estimated by the outgoing Socialist government to be about 6 percent his year - a figure Rajoy suggested may be too optimistic. This is because the economy posted no growth in the third quarter. That stagnation prompted the outgoing Spanish government to join the European Union, the International Monetary Fund and many private economists in lowering its growth estimate for this year from 1.3 percent to 0.8 percent.
Rajoy said Spain's staggering jobless rate had risen to around 23 percent overall and around 46 percent for people under 25. "The panorama could not be more somber."
Spain's overall national debt stands at 706.34 billion euros as of the end of September. That is up 15 percent from a year ago. The new figure is about 66 percent of GDP - but it does not include the substantial debts of Spain's 17 autonomous regions.
Outlining his economic plans, Rajoy, to be sworn in as premier today, said he would end a freeze on cost-of-living adjustments for pensions, but said besides that every category of government spending is now subject to review.
Spain's economy was hit after the 2008 credit crunch exposed a real estate bubble. Now borrowing costs are soaring for the eurozone's fourth-largest economy, and Spain is often cited, along with Italy, as the next country that may have to join Greece, Ireland and Portugal in accepting a bailout. But Spain's economy is larger than those three nations combined and considered too big for Europe's rescue fund to handle.
Rajoy's Popular Party won the November 20 elections by a landslide.
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