Wednesday, April 8, 2009

Spain's fiscally responsible finance minister fired

Spain: He had this odd idea that deficit spending was a stupid idea that would make matters worse. Zappo will have none of that thinking in his government.

José Luis Rodríguez Zapatero, the prime minister of Spain, ousted his fiscally conservative finance chief Tuesday in a cabinet reshuffle apparently aimed at restoring political confidence as he struggled to pull Spain out of an economic funk.

Mr. Zapatero replaced Pedro Solbes with Elena Salgado, an engineer by training and minister for public administration.

The prime minister said he was reshuffling the cabinet, barely a year after he won his second term in office, because “the political context and economic situation demand a change in rhythm.”

Mr. Solbes, 66, a former European commissioner for monetary affairs as well as finance minister under Felipe González, the former Socialist prime minister, was one of Mr. Zapatero’s most experienced ministers.

However, his weariness with dealing with a collapsing economy and with battling within the government against extending Spain’s fast-growing fiscal deficit had become palpable.

Tensions arose in recent months between Mr. Zapatero and Mr. Solbes on public sector spending, which has soared during the past year as the government announced stimulus plans of about €50 billion, or $66.3 billion. Last week, the Bank of Spain warned against too much deficit spending and predicted the deficit would rise next year to 8.7 percent of gross domestic product.

“The situation was unsustainable. The economic figures just kept getting worse and worse and he just didn’t have any answers,” said Hermann Tertsch, a political commentator for the conservative newspaper ABC.

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