MADRID (AP) — Spain's conservative government met Friday to approve a €10 billion ($13 billion) package of spending cuts and increased charges in education and health, part of an austerity drive to reduce its deficit and convince investors it won't need a bailout.
Speaking on the eve of the meeting, Prime Minister Mariano Rajoy said the measures were necessary because state coffers were running dry.
"It's necessary, imperative because at this moment there is no money to pay for public services," said Rajoy, who was in Colombia for an official state visit.
"There's no money because we have spent so much over the last few years. So we have to do this so that in the future we can get out of this situation," he said.
The measures include hikes in what people covered by the state health system pay for medicines over the counter.
In education, the government plans to approve increases in university entry fees, raise pupil-teacher ratios in schools and working hours for teachers.
Rajoy said the medicine price increases amounted to "just a few euros a month," adding that those with more money would be require to pay more. Unemployed people no longer receiving benefits are to be exempt from the increases.
Spain's regional governments mostly control education and health, but they are not likely to oppose the new measures as most are run by Rajoy's ruling Popular Party. Labor unions, on the other hand, have announced protests for April 29.
The latest package is part of the government's efforts since taking office in December to reassure the European Union and investors that it can handle its finances and reduce a deficit from 8.5 percent in 2011 to 3 percent next year.
The government has already announced some €40 billion ($52 billion) in deficit reduction plans and introduced labor and financial reforms.
So far, however, the measures have failed to completely convince investors and Spain's borrowing have begun to rise again.
On Friday, the yield for key 10-year bonds on the secondary market — an indicator of what the government would have to pay in debt auctions — was at 5.98 percent, making for a spread against the benchmark German bond of 4.26 percentage points.
A yield of 7 percent over the long term is considered unsustainable and could push Spain to follow Greece, Ireland and Portugal into asking for a bailout.
Analysts say that while Spain is doing its homework, it is seen as the weakest link in the eurozone and therefore taking the brunt of investor concern over European growth prospects.