Spain promises more spending cuts to reduce deficit

The Spanish government has said it will take additional measures to cut the country's gaping budget hole. The announcement came days after a eurozone deal to recapitalize ailing Spanish banks. Spanish Economy Minister Luis de Guindos on Tuesday pledged more efforts to keep the country's overdrawn budget at bay. He said additional cost-saving measures would be taken "in the coming weeks" in compliance with a spending agreement reached earlier with the European Union. The minister said Spain remained committed to slashing the budget deficit this year to 5.3 percent of gross domestic product (GDP), down from the 2011 level of 8.9 percent. Luis de Guindos announced the government would impose stricter budget discipline on the country's semi-autonomous regions, which had been responsible for a large part of the deficit. Tax reform The additional cost-cutting would go hand in hand with efforts to raise revenues, Madrid said. Measures would include a rise in value added tax (VAT), reducing tax deductions civil servants' salaries. Spain's announcement on budget policies came shortly after a eurozone agreement to inject up to 100 billion euros ($126 million) into ailing Spanish banks. Official data released on Tuesday pointed to a slight improvement in the Spanish labor market. The number of jobless people fell by 98,853 in June month-on-month. However, a total of 4.62 million people are still out of work, with many of them fearing that the austerity measures will dash their hopes of finding employment soon.