Spanish PM vows to reduce budget deficit

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IANS/EFE | 25 Mar, 2010
Spanish Prime Minister Jose Luis Rodriguez Zapatero has reiterated his administration's commitment to reduce the country's budget deficit by implementing austerity measures.

Zapatero made the statement in the Spanish parliament Wednesday when the leader of the main opposition Popular Party, Mariano Rajoy, challenged the credibility of the austerity plan.

The budget deficit is currently equal to 11.4 percent of the gross domestic product.

The premier Wednesday said the government and the autonomous regional administrations have already given the green signal to the plan to bring down public spending and urged the conservative Popular Party to contribute to that goal in the regions where it holds power.

Zapatero also said that to achieve the goal of deficit reduction, the government will approve a plan next month to streamline public companies.

The prime minister also unveiled other deficit-cutting initiatives, including a reduction in government hiring, a plan to detect and punish tax evaders, cutbacks in pharmaceutical spending and measures to help the autonomous communities lower their deficits.

Rajoy, however, said the austerity plan is not credible and does not guarantee the country's financial stability.

He also referred to a EU report that criticises the medium-term plan of Spain and other European countries for bringing their deficits down to the EU fiscal target of three percent or less of GDP.

According to Rajoy, the EU said the Spanish government was at fault for basing its projections on overly optimistic growth forecasts and revenue figures and for its slow pace of bank restructuring.

Zapatero responded by urging the opposition leader to read the report more thoroughly.

Like other nations, Spain is trying to trim debt and deficits without crippling the nascent economic recovery.

At nearly 20 percent, Spain has by far the highest jobless rate in the 27-member EU, with 4.13 million people out of work.

The Spanish economy remained in recession during the last three months of 2009, with GDP falling 0.1 percent from the third quarter and 3.1 percent from the fourth quarter of 2008, according to the latest report from the Banco de Espana.

The central bank offered a provisional estimate that Spain's gross domestic product suffered an overall decline of 3.6 percent last year, the biggest drop in decades.