Spain gets cracking on economy

2011-12-23 22:01

Madrid - Spain's new right-leaning government set a tight timetable on Friday to get cracking on promised reforms to fix the slumping, jobs-scarce economy.

At a first cabinet meeting, Prime Minister Mariano Rajoy's ministers filled a series of junior government posts and agreed a broad schedule for sweeping austerity measures to aid the economy.

On December 30, eight days after the ministers were sworn in, the government will issue a decree to extend the budget, which expires at the end of 2011, said Deputy Prime Minister Soraya Saenz de Santamaria.

At the same time, ministers will formally carry out a Popular Party campaign promise to raise pensions in line with inflation, the 40-year-old minister, who has amassed huge power in the government, told a news conference.

In a first austerity measure ahead of the New Year, however, it will also approve a rule setting the replacement rate for public sector staff at zero except for the security services - also a campaign promise.

Spending ceiling

Rajoy led his party to a crushing election win over the Socialists in November 20 elections, vowing to take action to repair state finances and the economy, weighed down by a jobless rate of 21.5%.

Rajoy has said he will slash Spain's deficit by €16.5bn ($21.7bn) in 2012 through sweeping cuts, with only pensions escaping the knife, as well as cleaning up banks and reforming the labour market.

The government will present a budget plan before March 31, said Saenz de Santamaria. Ministers have said they need to see the full-year 2011 accounts before finalising spending plans.

Ministers' priorities now are to agree a spending ceiling to be submitted parliament, draw up labour market reforms, and clean up the financial sector, bogged down with dodgy property assets.

"It was a cabinet meeting from which the various ministers emerged with a calendar of the most important things to prepare as of now," Saenz de Santamaria told the news conference.

The deputy prime minister, who is the youngest minister and one of only four women in the government, was asked about the huge powers the prime minister has invested in her.

Rajoy named her to three posts: Deputy prime minister; chief government spokesperson; and minister of the presidency in charge of relations between the premier's office and parliament.

In a royal decree published on Thursday the National Intelligence Service and its reported 3 500 spies, once part of the Defence Ministry, were transferred to Saenz de Santamaria's ministry of the presidency.

"I accept I have many duties. I am one of those who thinks you have to speak of duty more than powers," said the trained lawyer and married mother of a baby boy born just last month.

"I will do my utmost to handle everything, and if there is something I cannot do I will ask for help," said the politician, a close ally of Rajoy who has risen quickly through the party's ranks.

- AFP