Rajoy says to trim Spain's bureaucracy, but coy on jobs, savings

By Blanca Rodríguez

MADRID (Reuters) - Spain will cut red tape and shut down redundant institutions in an overhaul of state bureaucracy, Prime Minister Mariano Rajoy said on Wednesday, putting no figure on potential savings or job losses.

Rajoy said the central state should close many of its 4,800 separate bank accounts while all levels of government could unify contracting of power, cleaning and telephone services and get rid of overlapping energy and competition watchdogs.

He also recommended putting a single entity in charge of foreign trade, sending official notifications electronically and making it harder to set up public companies.

"Less paperwork, less red tape," said Rajoy, citing a 2,000-page report by a commission that suggested 217 efficiency measures. The report has not been made public.

"The imperative is to do more with less, without sacrificing quality," he said.

Brussels has pushed Spain to reform the public sector as part of efforts to make its economy more competitive as it tries to emerge from an economic crisis. The measures, especially shutting down public companies seen as money-wasters, are also seen as popular with voters.

Rajoy did not say whether the reforms would mean job cuts, a delicate subject given Spain's painfully high unemployment rate of 27 percent.

The International Monetary Fund urged Spain on Wednesday to boost job creation and further reform its banking sector, adding in an annual assessment that the country had already made strong progress in fixing its economy.

Rajoy, who meets with European leaders next week, said the public sector reforms would be carried out over several years.

With tax income plummeting, Rajoy said it was imperative to reduce the public sector - which is however viewed as less bloated than others in Europe.

Spain's public spending is lower than the European Union average as a percent of gross domestic product. Some 17 percent of the workforce is in the public sector, lower than the average in the OECD organization of wealthy nations, and spending on public sector salaries is in line with EU and OECD averages.

The government cut 375,000 public sector jobs in the past year and a half along with public spending. But the country had added the same number of public jobs in the previous three years.

(Writing by Fiona Ortiz; Editing by John Stonestreet)