SPAIN: Facing Up to Austerity

With the nation’s dollar reserves just about gone and some of its industries near bankruptcy. Generalissimo Francisco Franco decided to face the unpleasant facts. Last week he agreed to a sweeping austerity program in order to qualify for “at least $200 million” in credits from the International Monetary Fund and two other agencies, including’ an undisclosed amount from the U.S., which already pours $200 million a year into Spain. Among the austerity reforms:

¶ Devaluating the peseta from 42-to-the-dollar to 58, as well as ending the Spanish government’s practice of juggling 13 different rates of exchange for imports and exports.

¶ Slashing all private and semiprivate credit in half, and freezing of public spending at the present level of about $1 billion annually to halt inflation.

¶ Boosting of gasoline and most utility prices between 10% and 30% to put Spain on a pay-as-you-go basis.

¶ Passing new laws, similar to one permitting 100% foreign participation in Spain’s oil industry, to attract foreign investment.

¶ Promising an over-all reduction in government spending, including an end to subsidies to companies that perennially operate in the red—many of them government-run industries.