Mortgage defaulters in Spain end up owing large amounts to banks after they lose their homes.
|Rubalcaba, the deputy prime minister, announced the plan to raise the retirement age [AFP]|
Spain’s government has set a date to raise the retirement age, just days after announcing it would be selling multibillion euro stake in the lottery and airports, to ward off debt pressures threatening the country.
Jose Luis Rodriguez Zapatero, the Spanish prime minister, pulled out of a Latin American summit to attend a cabinet meeting on the economic crisis on Friday, as his country sought to avoid the type of debt debacle that hit Greece earlier this year.
His socialist government will approve the plan to raise the retirement age from 65 to 67 years, despite fierce opposition by the unions, Alfredo Perez Rubalcaba, the deputy prime minister, said.
“We have agreed that the government will approve the reform of the pensions system on January 28 in order to send it to parliament,” he said after the meeting.
The government unveiled the plan more than a year ago in order to ensure that the social security system remains viable, as the country confronts a rapidly ageing population and strained public finances.
Tens of thousands of protesters took to the streets across Spain in February to condemn the proposal.
Earlier this week, ministers also agreed to boost the state coffers with asset sales, cut taxes on small- and medium-sized business and to raise tobacco taxes. Zapatero had unveiled the expanded asset sales two days earlier.
The proposed sales include up to 30 per cent of the state-owned lottery, along with a 49 per cent share of the airport management company AENA.
Spanish media said the country could net as much as $6.5bn from the privatisation of the lottery and $12bn from the sale of the stake in AENA, reports said.
Salgado earlier said the sales would allow Spain to cut new borrowing from the markets by a third in 2011, lowering bond issues to about $40bn from the $60bn originally planned.
“That will allow us to reduce our stock of debt,” she said in an interview with the Financial Times newspaper published on Thursday.
Even with a reduction in new debt issues, the central government has to repay $160bn in existing debt that matures in 2011, according to treasury figures.
That figure excludes the debt racked up by Spain’s semi-autonomous, heavily indebted regional governments.
The Spanish government aims to rein in its public deficit from 11.1 per cent of GDP last year, the third highest in the eurozone after Greece and Ireland, to 3.0 per cent – the EU limit – by 2013.