Spain PP Plans Regional Spending-Ceiling Laws, Arenas Says
Regional leaders of the Spanish People’s Party, which beat the ruling Socialists in a national election on Nov. 20, agreed today on measures to tackle the euro area’s third-largest deficit.
The local leaders of the PP, which controls 11 of Spain’s 17 semi-autonomous regions since elections in May and is due to take over the central government on Dec. 21, decided to draft spending-ceiling laws for regional governments, carry out an overhaul of public services and take measures to avoid overlap between administrations, Javier Arenas, the party’s leader in Andalusia, said after a meeting in Madrid between 14 party leaders and Prime Minister-elect Mariano Rajoy.
Rajoy faces the challenge of reducing borrowing costs while preventing the euro area’s fourth economy from contracting after it stalled in the third quarter. The outgoing Socialists have failed to convince investors the nation can avoid following Greece, Ireland and Portugal into a bailout even after implementing the deepest austerity measures in three decades.
“What is clear is the path, the path is to try to have one administration per competence,” said Arenas, adding it is too early to estimate the spending cut efforts to be made.
The PP’s deputy leader Maria Dolores de Cospedal said during the news conference that the PP has no estimation yet of tax receipts for 2012 and no clear view of the nation’s budget situation for the full year.
Spain paid the most in at least six years to borrow for five years, at 5.544 percent, at an auction today. It sold 3.75 billion euros of bonds, meeting the maximum target. The yield on the 10-year benchmark bond declined after the sale to 5.71 percent as of 4:41 p.m. in Madrid, down 52 basis points from yesterday. It reached a euro-era high 6.78 percent on Nov. 17.
Rajoy has pledged to slash Spain’s overall budget gap to 4.4 percent of gross domestic product next year without giving details on where he may cut. The regions efforts are crucial to Spain’s fiscal consolidation as they control more than a third of public spending.
To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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