A day after Spanish Prime Minister Mariano Rajoy was caught in the streets of New York
enjoying a cigar, his administration presented their 2012 budget.
Madrid has been negotiating with Brussels to present a budget that will
approximate the “strict conditionality” that will accompany what many
suggest is an inevitable bailout of the Eurozone’s fourth largest
economy. Yields on Spanish bonds, which had surged in anticipation of
the announcement, fell under 6% once again.
“This is a crisis budget designed to get out of this crisis,” said Deputy Prime Minister Soraya Saez de Santamaria to the press, flanked by Finance Minister Luis de Guindos and Treasury Minister Cristobal Montoro. On Thursday, Spanish authorities presented a budget that aims to cut €40 billion ($51.4 billion) from their deficit next year, with government ministry spending falling 8.9% and infrastructure spending to drop from 1.3% of GDP to 0.89%, among other things.
Still, Spain is in trouble. Anti-austerity riots have taken hold of the country over the last few days, as the popularity of key politicians, and Rajoy particularly, plummets. Even with this budget, which stipulates GDP will decline 0.5% next despite economists suggesting the contraction could be twice as bad, according to El Pais, expenditures will have to rise.
Government spending is forecast to increase 9.2% to support rising debt payments and social security, the Spanish daily reported. Interest on its public dent will rise from €28.8 billion ($37 billion) this year to €38.6 billion ($49.6 billion) in 2013, Treasury Minister Montoro explained.
Read more: http://www.forbes.com/sites/afontevecchia/2012/09/27/spains-budget-reveals-51b-austerity-cuts-as-rajoy-enjoys-cigars-in-new-york/
“This is a crisis budget designed to get out of this crisis,” said Deputy Prime Minister Soraya Saez de Santamaria to the press, flanked by Finance Minister Luis de Guindos and Treasury Minister Cristobal Montoro. On Thursday, Spanish authorities presented a budget that aims to cut €40 billion ($51.4 billion) from their deficit next year, with government ministry spending falling 8.9% and infrastructure spending to drop from 1.3% of GDP to 0.89%, among other things.
Still, Spain is in trouble. Anti-austerity riots have taken hold of the country over the last few days, as the popularity of key politicians, and Rajoy particularly, plummets. Even with this budget, which stipulates GDP will decline 0.5% next despite economists suggesting the contraction could be twice as bad, according to El Pais, expenditures will have to rise.
Government spending is forecast to increase 9.2% to support rising debt payments and social security, the Spanish daily reported. Interest on its public dent will rise from €28.8 billion ($37 billion) this year to €38.6 billion ($49.6 billion) in 2013, Treasury Minister Montoro explained.
Read more: http://www.forbes.com/sites/afontevecchia/2012/09/27/spains-budget-reveals-51b-austerity-cuts-as-rajoy-enjoys-cigars-in-new-york/
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