Hundreds of thousands of Spaniards have launched massive protests against the centre-right government's latest measures, following more than a week of demonstrations across the country.
The parliament has approved a package of $80bn of spending cuts and tax hikes which are likely to deepen the recessionin which the eurozone's fourth-largest economy is mired.
"Austerity is the only option, given that Spain does not have enough resources to fund the liabilities of the public sector and the bailouts of the banks, [but] it is not the way to further growth. Austerity is only going to retard economic growth."
- Antonio Cabrales, a professor of economics
Under the bailout memorandum, 14 banking groups that make up about 90 per cent of Spain's banking system will be tested for their recapitalisation needs in a review due to be completed by the second half of September.
Madrid expects $36.6bn in a first tranche of money that will be available immediately for state-rescued banks that urgently need funds.
Spain's three biggest banks - Banco Santander, BBVA and Caixabank - are not expected to need extra capital.
According to an independent audit, the immediate problems were limited to four banks: Bankia, CatalunyaCaixa, NovaGalicia and Banco de Valencia, the last three of which have been nationalised.
Now there are signs of growing discontent at the economic pain being heaped on the Spanish public.
So, is austerity the answer to Spain’s economic woes? And will the Spanish people accept it?
Joining presenter Divya Gopalan to discuss these issues are guests: Susana Martin Belmonte, an economist and author of Nada esta Perdido (Nothing is Lost); Antonio Cabrales, a professor of economics at Universidad Carlos III de Madrid and a contributor to the Spanish Nada es Gratis Blog; and Jesus Gallego-Garcia, the international coordinator of the General Union Of Workers' Public Services Federation.
"Spain has been a very responsible country and is still a responsible country. We are starting to be irresponsible, actually, in the way we are implementing austerity measures and the only thing we are getting into - is being a poorer country. The only thing that has been proven is that these austerity measures have no effect whatsoever in the credibility of the country."
Jesus Gallego-Garcia, the international coordinator of the Public Services Federation
- Last month the Fitch rating agency downgraded Spain’s credit rating
- Package of public sector cuts & tax rises was announced last week
- Germany & Finland's parliaments voted in bailout for Spanish banks
- New bailout offers up to 125bn euros to the country’s banks
- This means, austerity measures will raise vat from 18 per cent to 21 per cent
- Spanish economy is struggling with weak banks, rising debt & recession
- Spain has the highest rate of unemployment in the eurozone at 24 per cent
- More than 50 per cent of Spanish people under the age of 25 are unemployed
- It is the fourth eurozone member to seek financial assistance
Source: Al Jazeera