Spain eases infrastructure spending cuts

18th August 2010, Comments 0 comments

Spain's government said Wednesday it will spend 500 million euros more than planned on infrastructure projects but still maintain its goal of slashing the deficit to the eurozone limit by 2013.

Transport and Development Minister Jose Blanco told a news conference the 500 million euros (644 million dollars) will cover some 50 projects which were suspended due to austerity measures.

The socialist government in May introduced a 15-billion-euro austerity package to rein in the public deficit from a massive 11.2 percent of gross domestic product in 2009 to six percent in 2011 and three percent -- the eurozone limit -- by 2013.

Blanco on July 22 announced a reduction in his ministry's budget of 6.4 billion euros for 2010 and 2011, leading to the suspension of 199 road and rail projects for one to four years.

Unions protested, claiming that the cuts would lead to the loss of 100,000 jobs at a time when unemployment has soared to more than 20 percent.

Finance Minister Elena Salgado told the news conference the new higher spending limit is the result of improved market conditions which has allowed the government to reduce its debt costs, and would not affect the deficit-reduction goals.

She also said the government has no plans to cut taxes to rein in the deficit.

"We believe that the current tax structure is adequate," she said.

Salgado said last week that the government planned to relaunch some suspended public works projects, but gave no details.

Blanco said Wednesday that the projects to be revived were those that were already in "an advanced state."

He said one of these would be the completion of a motorway connecting Madrid and the northern coastal city of Santander.

Spain slumped into its worst recession in decades at the end of 2008 as the global financial meltdown compounded a crisis in the once-booming property market.

It recovered this year with tepid first quarter growth of just 0.1 percent.

© 2010 AFP

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