Spain plans to cut defecit

Following yesterday’s ECOFIN meeting in Brussels, Spain’s Minister for Tax and the Economy said that the country has undertaken to make an additional cuts in spending of 5 billion in 2010 and 10 billion in 2011, reducing the deficit by an additional 0,5% to 9.3% in 2010 and by an additional 1% to 6.5% in 2011.

The Minister commented how the situation calls for a more aggressive control of the deficit in Spain. She noted that the reduction of the deficit is not additional, as it was planned for 2010-2013, but what the new undertaking does is to bring forward a greater effort in the first two years. She said the Eurozone was in exceptional circumstances and this demanded an exceptional response.

It was Spain’s contribution to the plans from the EU and the IMF to protect the Euro currency and send a message to the markets that the currency will be supported.

The new mechanism to protect the Eurozone will allow the movement of as much as 750 billion €, in what is the largest financial operation in history, negotiated against the clock to protect the markets against the speculators moving against individual country’s sovereign debt.

The role of the European Central Bank is strengthened to allow extraordinary intervention in the debt and currency markets, in order to generate liquidity.