Spanish Budget: Spain to tap EUR 3 billion from pension fund to cover liabilities

FXstreet.com (Córdoba) - Spain 2013 budget plan is focused on cutting spending rather than hiking taxes, said Spain deputy PM, Soraya Sáenz de Santamaría, in a press conference Thursday.

The deputy PM announced that Spain seeks to control budget deficit and that reforms are aimed to boost competitiveness and to overcome the crisis.

Public spending will be cut by 58% in 2013. Pensions, scholarships and interest costs on the foreign debt will be the only items to increase. That way, the social spending will represent 63.5% of budget.

Santamaría also announced that the government will implement a plan of 43 new laws to bolster economy called Spanish Strategy of Economic Policy (Estrategia Española de Política Económica).

Moreover, Rajoy's government announced it will tap EUR 3 billion from pension reserve fund "to cover some treasury needs".

Spanish government will create several organisms in order to supervise different sectors. Spain will create agency to monitor regional budget targets and an organism designed to unlock the conflicts that may occur between companies and workers. The government also announced the liberalization of energy, services and telecom sector.

Spanish Budget Min, Cristóbal Montoro, stated that the government anticipates the GDP will contract 1.5% in 2012, while recession will extend into 2013 with a 0.5% decline. However, he expects that the 6.3% deficit/GDP ratio to be met in 2012, as well as the ratio of 4.5% for 2013.

Montoro also said the tax revenue projections for this year will be fully met. For 2013, he forecasts revenue to growth by 3.8%.

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