The measures, including frozen salaries for civil servants and a 9% budget cut for all government departments, are intended to save $50 billion.
Spain announced cutbacks and tax increases Thursday aimed at saving $50 billion from its budget next year, as Europe's fourth-largest economy struggles to avoid a larger bailout by its neighbors.
Under
a draft budget for 2013, civil servants' salaries would remain frozen
for a third year, all government departments would take a budget cut of
about 9%, and new taxes would be levied on lottery winnings, the
government said Thursday.
The budget announcement was made against
a backdrop of unrest in Madrid. Thousands of Spaniards had launched an
"Occupy Congress" movement two days earlier, surrounding the parliament
with protesters in anticipation of painful cuts to public healthcare,
education and pensions.
But Deputy Prime Minister
Soraya Saenz de Santamaria said the government would dip into a social
security reserve fund to keep paying pensions, and even increase monthly
payments by 1%.
"The parts [of spending] that will increase are
pensions, scholarship funds and interest on the debt," Santamaria told
reporters after a Cabinet meeting.
Prime Minister Mariano Rajoy,
elected in a landslide in November, has sought to keep his campaign
promise not to touch pensions, while avoiding a second, bigger bailout
for his cash-strapped government. Precious tax revenue has been diverted
to jobless benefits as the unemployment rate rises and to regional
administrations that have overspent for years.
Spain's jobless rate is the highest in the Eurozone, near 25%, with unemployment among young people double that.
Budget
Minister Cristobal Montoro said that rate would not change
significantly in 2013, but he also predicted that Spain would emerge
from recession after next year.
Spain is already getting up to
$125 billion in loans from Europe for its ailing banks, struck hard by
plunging property values. Madrid plans to publish results of bank audits
Friday and to announce how much it will tap from its European loan
commitment.
Meanwhile, Castilla-La Mancha on Thursday became the
fifth Spanish region to indicate that it would draw on a rescue fund set
up by the central government. Only three of the country's 17 regions
have ruled out needing aid.
Spain has made a commitment to reduce
its budget deficit to 4.5% of its gross domestic product, or GDP, next
year, compared with nearly 9% last year.
Some economists said the 2013 draft budget assumes levels of growth and tax revenue that are overly optimistic.
Frayer is a special correspondent.
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