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Spain to sell stake in lottery, end jobless subsidy

Published on December 01, 2010

Spain, fighting market fears it may need an Irish-style rescue, said on Wednesday it will sell 30-percent of the state lottery, offload a bigger stake in the main airport operator and scrap a jobless subsidy.

Prime Minister Jose Luis Rodriguez Zaptero’s Socialist government, which has slashed spending so as to bring down its public deficit, argues it has no need of an Irish-style economic rescue.

Financial markets have nevertheless pushed up its debt risk premium, fearing that the next dominoes to fall after Ireland could be Portugal and then the far bigger economy of Spain.

“We will privatise 30 percent of the state lottery board and will allow private capital to make up 49 percent of the airport management authority,” Zapatero told parliament.

The Spanish government had planned to sell a smaller stake of 30 percent in the AENA airport autority, which bills itself as the world’s largest handling 187 million passengers last year.

AENA manages 47 airports including the main gateways to Madrid and Barcelona and two heliports in Spain. It has partnership holdings in 16 Latin American airports as well as in London’s Luton airport.

Spain’s state-run Loterias y Apuestas del Estado posted a net profit of 2.99 billion euros in 2009, a 3.5 percent increase over the previous year despite an economic crisis.

The government had said as recently as January that it had no plans to privatise the lottery.

The prime minister said a 420-euro monthly susbsidy to unemployed workers who have lost their rights to benefits that was introduced in August 2009 would be allowed to expire in February.

Spain’s unemployment rate has soared to a European Union high of around 20 percent following the collapse of a labour-intensive construction boom at the end of 2008 which had fueled growth for over a decade.

The measures announced by Zapatero come a day after the gap between Spanish and benchmark German borrowing rates hit record highs following Ireland’s near-collapse, which has revived investor fears that Spain will also need a bailout.

European Union and International Monetary Fund officials on Sunday approved a 85-billion-euro (113-billion-dollar) plan to to rescue Ireland’s debt-ridden banking sector, six months after Greece received a similar bailout.

The Spanish government aims to trim the public deficit from 11.1 percent of annual output last year — the highest in the eurozone after Greece and Ireland — to 6.0 percent in 2011 and three percent, the EU limit, in 2013.