The Spanish government has announced the following spending cuts to calm fears over the cost of borrowing to the government:
- Reduce the remuneration of staff in the public sector by 5% on average starting in June 2010 and freeze them in 2011. The members of the Council of Ministers and other senior officials will have their remuneration cut by more than the top band in the scale established for public employees.
- Suspend the index-linking of pensions for 2011, except for non-contributory and minimum pensions.
- Eliminate the temporary regime for partial retirement under Law 40/2007.
- Eliminate the 2,500-euro tax credit for births from 1 January 2011.
- Reduce spending on medicines through a review of the price of items excluded from the system of reference prices and adapt the number of units into which medicines are packaged to the standard duration of treatment, as well as dispensing medicines in single doses.
- Withdraw the retroactive payment of benefits for dependency for new applicants backdated to the date of application. At the same time, a maximum period of 6 months for their resolution will be established, after which they will be backdated to this maximum.
- Reduce Official Development Aid by 600 million euros in 2010-2011.
- A reduction of 6,045 million euros is forecast between 2010 and 2011 in central government investment.
- An additional saving of 1,200 million euros is expected by the Autonomous Regions and local authorities.
Markets responded positively to the news which came on top of a €750 billion package to rescue the Euro which was funded by the Eurozone, European Commission and International Monetary Fund.