Mariano Rajoy took stock of Spain?' public sector reforms yesterday after starting them nearly a year and a half ago in order to try and curtail problems with the nation's low savings rate and inefficient government. Around 50% of the proposed measures have been completed so far by a government reform commission known by the acronym "CORA" in Spanish.
Still, midway through a reform agenda that is expected to close in December 2015, Spain has only saved 28% (10.147 billion euros) of the 37.620 billion euros that it forecasted. Spain will struggle to meet their savings goal, but if it can make up for lost time that would be major win.
An announcement that Rajoy gave to his party last June that time was up for completing the reforms sows some doubts about the government's urgency to complete them. We are entering an election period, and it is really hard for politicians to take risky steps such as closing public companies or to reduce duplicate services by giving one government agency a service contract instead of the other. With these half-hearted reforms, the government should not feel too proud of itself.
Mostly, the government has performed cutbacks through cutting jobs -- many of them planned retirements and temporary contracts that were going to expire anyway. In other words, there hasn't been a lot of major restructuring. The legislature is starting its final session and Rajoy has lost his chance to make any changes after missing the prime chance to do so. A better structural change would have given Spain a chance to trim its deficit and helped economic growth. Maybe next time.
