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The pain in Spain now falls on the old and the young

April 20, 2012 | 11:06 am

Spain crisis

MADRID -- Spain's government will charge senior citizens for prescription drugs, increase fees for university students and extend teachers' work hours under reforms approved Friday that are designed to help the cash-strapped country narrow its budget gap.

Prime Minister Mariano Rajoy has already slashed public-sector spending and raised taxes to save the government $35 billion this year. But he was forced to dig $13 billion deeper and make unprecedented cuts to health and education to calm market fears that Europe's fourth-largest economy could be next to fall in the continent's debt crisis.

Spain's borrowing costs have shot up in recent weeks, nearing levels that sent Greece, Ireland and Portugal into bailouts. On a state visit to Colombia, Rajoy called the reforms "necessary … so that in the future we can get out of this situation."

"There's no money because we have spent so much over the last few years," Rajoy told reporters late Thursday.

Until now, Spanish retirees have paid nothing for doctor visits, hospitalization or medicines. But under the new rules, they will be required to pay 10% of the cost of prescription drugs, with a maximum monthly payment of up to about $24. Co-payments for younger, working Spaniards will also rise, depending on income level. The new payment system will take effect within two months.

Changes also include higher student-to-teacher ratios in public schools, longer working hours for teachers and privatization of Spain's public television networks. 

Spain's Cabinet adopted the measures Friday. They still need parliamentary approval, which is virtually assured because Rajoy's conservatives hold a large majority in the Legislature. The reforms are not open to additional amendments from lawmakers because lengthy debates already took place this week.

Many of the reforms approved Friday cover services provided by regional governments under Spain's system of devolved powers. But many of the regions are more indebted than the central government and are unlikely to oppose new cuts. A large number are also governed by Rajoy's fellow conservatives.

Labor unions, which held a general strike last month against labor reforms, reacted to Friday's changes by calling for nationwide protests April 29.


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Photo: A broker strolls by the main screen at the Madrid stock exchange Friday. Credit: Paul White / Associated Press