Spain; 40 bln spending cuts in 2013 budget

The government of Spain is set to approve today a national reform plan and a budget for 2013 with a further 40 billion cut in public spending after the 65 billion 2012 budget approved only five months ago. Among the measures anticipated by the media are a limit set on anticipated retirements, the creation of an independent authority for fiscal stability, the end of a number of tax exemptions and a new freeze on the salaries of public employees for the third consecutive year. The measures are in line with the EU's recommendations to regain investors' confidence and avoid new conditions to a request of a soft bailout of the economy which the government of Mariano Rajoy is reportedly negotiating to activate the ECB's intervention for the acquisition of the Spanish debt. The new anti-deficit cuts worth 40 billion will be more significant than those in the 2012 budget approved five months ago providing for cuts totaling 27.3 billion to reduce the deficit from the 6.3%, which Madrid hopes to fulfill in a year, to the 4.5% forecast in 2013. The expenditure limit will reach 126.792 billion, 9.2% more than in 2012, although the non-financial expenditure limit is less than 73.5 billion.