Spanish Government Approves €15 Billion Austerity Plan
Friday, May 21, 2010 @ 1:26 PM
(RTTNews) - Spanish government on Thursday approved a €15 billion ($19bn) austerity plan aimed at reducing the country's large fiscal deficit and easing concerns that Spain could follow Greece into a debt crisis.
The tough austerity package, which was announced by Prime Minister Jose Luis Rodriguez Zapatero last week, was approved during a Cabinet meeting on Thursday. The tough cost cutting measures are expected to save the Spanish government 15 billion euros in 2010 and 2011.
The plan is expected to reduce Spain's deficit from its current level of more than 11 percent of gross domestic product to 6% of GDP by 2011 and to 3% by 2013. The plan calls for slashing salaries of Cabinet ministers and other senior officials by 15 percent.
It also includes an average five-percent pay cut for public sector workers from June, and a pay freeze from 2011. However, workers unions in Spain have reacted to the austerity plan and have called a public sector strike on 8th June to protest against government's tough cost cutting measures.
The latest austerity plan is over and above a 50-billion-euro austerity package announced in January to reduce Spain's budget deficit from the 11.2% of GDP posted last year to the eurozone limit of 3% by 2013.
The approval of the latest set of austerity measures by the Spanish government comes a day after official data indicated that the country has managed to move out of recession in the first quarter of this year. Data released Wednesday reveled that the country had posted a growth rate of 0.1% in the first quarter, mainly due to a rise in exports and household spending.
Spain had entered recession in the second quarter of 2008 amidst the global financial meltdown and the property market crisis. Though Spain managed to move out of recession in the first quarter, the country's unemployment rate remains at 20%, which is almost twice the eurozone average.
Source: RTT News