Prime Minister José Luis Rodríguez Zapatero on Wednesday unveiled a new round of anti-crisis measures as he sought to convince the markets of Spain's creditworthiness.
The new package includes raising up to 14 billion euros from the partial privatizations of the state lottery and the country's airport operator. As previously announced, the government will also ax a monthly payment of 426 euros to people who are out of work but no longer entitled to unemployment benefits.
The Spanish stock and bond markets enjoyed a welcome reprieve on Wednesday, but in reaction to comments Tuesday by European Central Bank President Jean-Claude Trichet rather than Zapatero's latest plan. Trichet said speculators were wrong to question the determination of governments to ensure the stability of the euro zone, sparking speculation the ECB will announce further measures today after its monetary policy meeting to prop up countries in the single-currency bloc under siege by the markets.
Zapatero told Congress his administration also plans to offer additional tax benefits for small and midsized companies, besides beefing up services aimed at helping the unemployed find work and making more extensive use of the private sector to achieve the same end.
Spain has by far the highest jobless rate in Europe at 20 percent, putting a huge drain on the state's coffers at a time when it is straining to rein in its yawning public deficit.
The government plans to sell up to 49 percent of a new company, Aena Aeropuertos, to be set up to group together the country's airports. Madrid's Barajas and Barcelona's El Prat will be tendered out to the private sector in the form of concessions. Spain's Socialist leader said the administration also plans to sell 30 percent of the state lottery to the public.
The Public Works Ministry values Aena at some 30 billion euros but after subtracting debt of some 12 billion euros, the airport operator has an equity value of some 18 billion euros.
A concession to manage Barajas for around 30 to 40 years could fetch some 9 billion euros and about 5 billion euros in the case of El Prat. The sale of 30 percent of the state lottery could bring in a further 4 billion euros to public coffers.
The European commissioner for competition, Spaniard Joaquín Almunia, said the latest batch of initiatives unveiled by Zapatero "show the determination of the Spanish government" to tackle the problems the country is facing. "We are sure that this will have a positive impact [...] and help reinforce confidence in Spain."
The government is aiming to reduce the shortfall in its books from 11.1 percent of GDP last year to 9.3 percent this year and 6 percent in 2011 through an austerity drive that combines spending cuts and tax hikes. On Monday, the Commission estimated the budget deficit for next year would come in at 6.4 percent of GDP.
In order to deal with the mounting crisis, Zapatero on Wednesday cancelled his planned trip to attend the Iberoamerican summit meeting taking place in Argentina over the weekend. The US Treasury Department's undersecretary for international affairs, Lael Brainard, will visit Madrid, Berlin and Paris this week to discuss the debt crisis in Europe.