Financial And Budget Measures

Financial and budget measures

Categories of Financial and budget measures

Inphography transcript

Why are the measures to support the financial system so important?

Because families need money to buy and companies need money to keep on working. Both families and companies get their money from banks.

The crisis has provoked the lack of liquidity and this forces banks and savings banks to impose harder loan granting conditions. And as families and companies don’t receive money, a consumption and production slump takes place.

Banks and savings banks do not trust the international situation and, thus, they did not grant loans to each other; as has happened so far. This has made their resources decrease and, thus, they have imposed harder conditions on those families and companies that intend to apply for credit.

Given this situation and in consonance with the actions implemented by other neighbouring countries, the Government has created the Fund for the Acquisition of Financial Assets. This measure will make it possible for financial entities to recover their liquidity. Thus, by purchasing assets from these entities, the State will grant loans to banks and savings banks. These entities will access those loans through an auction, they pay a certain interest for the loan to the Government and they undertake to provide families and companies with it by facilitating loans.

The Plan E includes the actions that the EU countries have adopted in a coordinated way in order to provide the financial system with liquidity given the current extraordinary, unstable circumstances.

These measures have been designed so as not to generate costs for taxpayers and they are aimed at resuming credits for families and companies. Furthermore, the scope of the Deposit Guarantee Fund has been increased to 100,000 Euros per account holder and entity, in order to strengthen confidence in the financial system.

As to the State budgets, there are also specific actions concerning current expenditure austerity which add up to the necessary support measures for families and companies.

Reduction of current expenditure (chapter II) in 2009

The General State Budgets contemplate a 1.8% reduction of current expenditure on goods and services, which will help save nearly 65 million Euros in 2009, which will be invested in alternative initiatives (production expenditure and social expenditure).
Beneficiaries
Society as a whole, as these resources will be invested in new measures to boost up economy.
Development
It is contemplated [...]

Ejes: Budget measures, Financial and budget measures
Reduction of public staff expenditure

Public expenditure on Employment Bids for the incorporation of new public servants to the Crown is reduced by 70%, in order to slow down the increase of staff expenditure. This measure will not affect essential public services, namely, education, health care, safety and public peace or Justice. This will help save 300 million Euros until [...]

Ejes: Budget measures, Financial and budget measures
The salaries of senior State officials

The complementary and basic revenues of senior State officials (Director General and higher), public companies and other State institutions will be frozen during 2009, as an austerity measure and as an example for the rest of the Public Organisms, many of which have also adopted similar measures, in consonance with the Government’s announcement.
Beneficiaries
Society as a [...]

Ejes: Budget measures, Financial and budget measures
Current expenditure reduction (chapter II) in 2008

The Government issued notice of non-availability of 20 million Euros for current expenditure in 2008 in order to implement the austerity criteria that prevailed during the elaboration of the Budgets for 2009. This amount will be proportionally distributed among the different Ministries.
Beneficiaries
Society as a whole, for these resources will be invested in new measures aimed [...]

Ejes: Budget measures, Financial and budget measures
Fund for the Acquisition of Financial Assets

This Fund has been created to support companies and families by providing credit entities with liquidity through the acquisition of maximum credit quality assets. Thus, this measure is intended to reduce the impact of the difficulties our credit entities are facing to get financing at reasonable prices as a consequence of the global financial crisis [...]

Ejes: Financial and budget measures, Financial measures
State Guarantees for the new liabilities issued by credit entities

This measure is aimed at providing Spanish financial entities with an insurance mechanism by granting State guarantees to support the liabilities issued by those entities in the medium term, which would reinforce the credit quality of such liabilities while making it possible to improve the conditions to access wholesale credit markets for our banks and [...]

Ejes: Financial and budget measures, Financial measures
Expansion of the coverage of the Deposit Protection Fund

Following the initiatives implemented in the rest of the EU countries, the Government decided to strengthen the Spanish Deposit Protection Fund by expanding its coverage up to 100,000 Euros per account holder and entity, which has served to calm small investors and to soothe their concern about their accounts and deposits.
Beneficiaries
This measure is intended to [...]

Ejes: Financial and budget measures, Financial measures
Authorisation to strengthen credit entities’ assets

This is an exceptional measure and, just as the State guarantee system to back up the liabilities issued by Spanish financial entities, results from the commitment assumed by the Heads of State and Government in the Euro zone during their meeting last 12 October 2008 to apply the necessary measures to preserve the stability of [...]

Ejes: Financial and budget measures, Financial measures