Spain approves new austerity measures; says no need to tap EU fund
04 Dec 2010
Amid rising concerns of sovereign debt and a potential financial rescue, Spain, euro zone's fourth-largest economy, has unveiled further measures to contain the budget deficit and avoid the contagion spreading from Ireland to the Iberian Peninsula.
The cabinet meeting approved on Friday the selling of nearly a-third of its national lottery, partial privatisation of the nation's airports, apart from cutting benefits to unemployed and lowering taxes for small companies.
The government also raised tax on tobacco, and accelerated the pension reforms by setting a date on 28 January.
Spanish finance minister Elena Salgado said that the tax increase will generate additionally €780 million.
The government will allow a subsidy for the jobless to expire in February 2010, which was introduced in August 2009 and benefitted over 200,000 workers with a payment of €426 per month.
The finance minister said that Aena Aeropurtos, Spain's airport operator would remain a public entity. However, private investors will be allowed to take minority stake in the company.
The spread on Spanish 10-year bonds, which reached the highest level of 298 basis points on Monday, dropped to 218 basis points on Friday following the multi-billion euro bailout of Ireland and the European central bank's message that it would buy more European bonds and resort to further measures to avert future crises.
