Spain eyes €10bn efficiency savings

Spain’s centre-right government on Monday announced plans to save at least €10bn of public spending by rationalising health and education, in its latest attempt to restore the country’s credibility in international markets after last week’s delayed 2012 budget.

The office of Mariano Rajoy, Popular party prime minister, made the announcement after he presided over a meeting of key cabinet ministers. It gave few details of how the money would be saved, but said a drive would begin this month to eliminate overlaps and improve efficiency in public services.

“The anticipated savings will exceed €10bn,” Mr Rajoy said. Schools and hospitals are run and financed by Spain’s 17 autonomous regions, but the PP-controlled central government has vowed to enforce budgetary discipline in order to meet strict deficit reduction targets imposed by the European Union.

Luis de Guindos, economy minister, also floated the idea of making those with annual incomes of more than €100,000 pay for public health care services, which are currently free in most parts of Spain. “It’s a very important debate,” he said in a radio interview.

Mr Rajoy’s government says it is determined to cut Spain’s public sector deficit from 8.5 per cent of gross domestic product in 2011 to 5.3 per cent of GDP this year and 3 per cent in 2013.

Some economists and bond market investors say they doubt that Spain can meet these targets because of probable overspending by the regions and the need to shore up the banking system with state money.

The statement on Monday said the government had decided to accelerate the sale of banks that have been taken over the by the government but not yet sold. They include Banco de Valencia and CatalunyaCaixa.