FACTBOX-Spain’s plan to cut budget deficit to 6 pct in 2011

MADRID, May 12 (BestGrowthStock) – Spain’s Socialist government
announced on Wednesday further spending cuts to speed up fiscal
consolidation and meet its revised deficit targets of 9.3
percent of GDP in 2010 and 6 percent in 2011.

The government has already promised to reduce its budget
deficit to 3 percent of GDP by 2013 from 11.2 percent in 2009.

The cuts announced today will save an additional 15 billion
euros ($19.05 billion) in 2010 and 2011. [nLDE64B13G]

The measures, approved by Brussels last weekend, are part of
a strategy to convince markets Spain will tackle rising deficits
and debt and avoid a Greek-style crisis.

Analysts say the measures are encouraging, as they are not
temporary but aimed at getting to the heart of the problem.
However, with growth likely to remain anaemic, further
belt-tightening is not ruled out. [nLDE64B0TI]

Unions, however, say the additional budget cuts put a strain
on their relationship with the government.[ID:nMDT009022]

Here are the main goals of the existing plan:
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2010 2011 2012 2013

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Public deficit (pct GDP) 9.3 6.0 5.3 3.0

Public debt (pct GDP) 65.9 71.9 74.3 74.1

GDP growth (pct) -0.3 1.8 2.9 3.1

Private consumption (pct) -0.1 2.5 3.3 3.3

Investment (pct) -6.5 0.3 4.2 5.9

Internal demand (pct) -1.4 1.4 2.6 3.0

Exports (pct) 2.8 5.2 6.9 7.4

Imports (pct) -1.3 3.7 5.8 6.8

Unemployment rate (pct) 19.0 18.4 17.0 15.5

(source: Spain Treasury)

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PUBLIC SPENDING

* Investment spending to be cut by 6.045 billion euros
between 2010 and 2011

SPENDING ON PUBLIC WORKERS:

* Civil service salaries to be cut by average 5 percent in
2010 and frozen in 2011. Cuts will most affect higher wage
earners.

* Cut the government ministers’ wages by 15 percent

SPENDING ON SOCIAL WELFARE:

* Suspend yearly pension increase in 2011, except in the
case of non-contributory and minimum pension payments.

* Eliminate the 2,500 euros birth payment from Jan 1, 2011

* Make early retirement more difficult

* Eliminate retroactive payments for those people claiming
carers’ allowance

* Cut pharmacy costs, including revising medicine prices

REGIONAL GOVERNMENT SPENDING

* Forecasts additional 1.2 billion euros savings from
regional and local governments.

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FACTBOX-Spain’s plan to cut budget deficit to 6 pct in 2011