HispanicBusiness

Spanish Prime Minister Mariano Rajoy on Wednesday announced tougher penalties for corrupt officials amid a massive corruption scandal engulfing his government. The statute of limitations will be extended for corruption-related offences, Rajoy said during a parliamentary debate on the state of the nation.

He also proposed that the finances of all public officials be audited at the end of their mandates, and called for a broad cross-party agreement on measures against graft.

"It is not true that there is a generalized state of corruption in Spain ... Spain is not the most corrupt nation, nor are all politicians corrupt, nor are we drowning in corruption," Rajoy said.

The opposition criticized him for not mentioning Luis Barcenas, a former treasurer of the governing People's Party (PP), who allegedly arranged for Rajoy and other party leaders to receive under-the-table payments from the private sector for nearly two decades. The PP denies such reports.

The anti-corruption measures announced by the premier did not have "any credibility" as long as the PP was not taking responsibility for the scandal, said Jose Luis Centella from the far-left party Izquierda Unida.

Rajoy also announced "a second generation of reforms" to galvanize the country's recession-hit economy and to reduce the 36-per-cent unemployment rate.

The government will mobilize credits and other financial resources worth about 45 billion euros (60 billion dollars) mainly for small and medium-sized companies, Rajoy said.

Companies with an annual income of less than 2 million euros do not need to pay value added tax if their clients have not paid them.

Other measures included incentives for companies to hire young people and reducing overlapping between administrative organs.

Rajoy's government has adopted drastic austerity policies in order to cut the budget deficit, which the premier said remained below 7 per cent of gross domestic product in 2012.

Rajoy did not say whether Spain had met the target of 6.3 per cent, which had been agreed with the European Commission. Spain had widely been expected to miss that target.

In 2011, the deficit stood at 8.9 per cent.