Monday July 16, 2012
Spain Govt to cut US$69bil from public deficit in next 2˝ years
MADRID: The Spanish government's most recent reforms will slash 56.4 billion euros (US$69bil) from the public deficit in the next 2 years, an official document showed, leaving a gap to be filled by taxes on energy.
Spanish Prime Minister Mariano Rajoy pledged 65 billion euros of savings from tax hikes and spending cuts on Wednesday in a painful package aimed at convincing the European Union (EU) and investors his government is serious about reform.
The 8.6 billion euro shortfall will be covered by other measures such as new energy and environmental taxes, according to a document for international investors posted on the Economy Ministry website.
Of the 56.4 billion euros of measures laid out so far, about 34.4 billion euros will come from changes to tax rates and 22 billion from spending cuts until 2014.
The government has said it would approve a new energy tax scheme in July that would force utilities and consumers to share the burden of a 25 billion euro tariff deficit to energy companies.
Spain needs to erase 65 billion euros from its public deficit in order to reach EU debt reduction targets by 2014.
It must cut its public deficit of 8.9% of gross domestic product to 6.3% in 2012, 4.5% in 2013 and 2.8% the year after.
But the most recent reforms have provoked protests from citizens tired of bearing the burden for an economic crisis they blame on bankers and politicians. Nearly one in four is unemployed in the country.
Thousands of Spaniards have gathered in cities across Spain since Rajoy unveiled the measures on Wednesday, a Madrid police source said.
Speaking at a party rally in Granada, Rajoy said the unpopular reforms were necessary to put the country back on a path of growth and job creation.
“None of us like the decisions taken in the last few days, but if we hadn't taken them things would be much worse,” Rajoy told his supporters.
“This is a great country and you have a government that will get us out of this crisis.” - Reuters