The new Spanish government is heading down a path of austerity and budget control to nudge the country into economic shape for European monetary union by the decade's end.
But newly elected Prime Minister Jose Maria Aznar isn't expected to make any major changes in the country's past programs that have lured U.S. and other multinationals with a scheme of investment incentives to the Iberian peninsula.
FOREIGN INVESTORS STILL WANTED
''I don't think the climate is going to change,'' said Adolfo Estevez, director of foreign investment at the Trade Commission of Spain in New York City. ''People were tired of the old government after 13 years in power. But I don't think there are going to be any big changes. The government still wants foreign investors.''
Spain's investment star has waned a bit since its entrance into the European Community in 1986. At that time, many U.S. and other multinationals viewed its low labor rates and educated work force as a magnet for setting up production facilities that could then distribute goods to the rest of the newly merged Europe.
Now, as the average hourly compensation rests at $11 a hour and market reform has swept through developing countries around the world, many U.S. companies have taken their dollars to less expensive locales in Latin America and Asia. Still, U.S. multinationals are the top foreign investors in Spain with $1.25 billion in the country at the end of 1995.
SPENDING CUTS TOP PRIORITY
For Mr. Aznar, a conservative 43-year-old former tax inspector, the top priority is cutting spending and getting the Spanish economy in line so it can join the planned European Union single currency in 1999.
Sworn into power on Sunday by King Juan Carlos, Mr. Aznar heads the first Popular Party government since democracy was installed in Spain 20 years ago. And with the new 14-member Cabinet scheduled to hold its first session today, Spanish politics is embarking on a new era after 13 years of Socialist rule under outgoing Premier Felipe Gonzalez.
Mr. Aznar has a lot of work to do as the Socialists have left a government debt of $359 billion, 22.7 percent unemployment and a bloated and unwieldy public sector.
Jordi Hereu, an executive with a Barcelona management company, said the business community in Spain is behind continued integration with the European Union. But one danger facing Spain's continued growth is the economic slowdown in France and Germany, where importers have been large buyers of Spanish goods, Mr. Hereu said.
''The priorities of the next government are the same as the last one . . . to be able to accomplish the goals of the European Monetary Union,'' Mr. Hereu said. ''To do that, the government has to reduce its government debt.''
Mr. Hereu is national marketing manager at Cilsa, a company developing the Barcelona Logistics Zone. The area include the Port of Barcelona, the airport and a free-trade zone.
HOW ELIGIBILITY IS DECIDED
Each European country's eligibility for the European Monetary Union will be decided on the basis of each state's 1997 economic performance.
Spain's inflation rate appears to be on track, with the Bank of Spain predicting a rate below 3 percent this year. But government debt is at about 65 percent of the gross domestic product and could be reduced slightly to 63 percent or 64 percent. That still is above the European guidelines of 60 percent of GDP.
Analysts say the big test for Mr. Aznar will be whether he can slash the budget deficit, the gap between state revenue and spending, to 3 percent of GDP by 1997. The rate was 5.8 percent in 1995.