Spain will not need all €100bn euro of bailout
Published 05/09/2012 | 08:00
Spain's ailing banks are unlikely to need all of the €100bn (£79.25bn) which was made available by the country's euro partners, Spanish economy minister Luis de Guindos said.
In a further indication that Spain's economic problems are not as acute as some have been fearing, Mr de Guindos also insisted that no additional austerity measures will be needed to meet the Spanish government's deficit-reduction target.
Mr de Guindos said Spain's most troubled bank, Bankia, will get urgent aid, while two indebted Spanish regions appealed for emergency funding to deal with a crippling liquidity crunch.
Spain's banks have an estimated €184bn (£145.93bn) in problematic property loans and investments. The other 16 eurozone countries have set aside the rescue package to help troubled Spanish lenders.
The minister said austerity policies will be enough for Spain to meet its target of reducing the budget deficit to 6.3% of national income this year from 9% the previous year. The government has already unveiled €65bn (£51.5bn) of tax hikes and spending cuts. "Spain has already set out a path which is sufficient for the problems we face," Mr de Guindos said.
Spain is in a double-dip recession with a 25% unemployment rate. German chancellor Angela Merkel is due to visit Madrid on Thursday for talks with prime minister Mariano Rajoy.
Her spokesman, Steffen Seibert, said yesterday that Spain must push through its reform plans to improve the long-term prospects of its economy and alleviate market concerns.
He told reporters in Berlin: "We have said many times in the Spanish case ... that the path Spain has taken recently is remarkable.
"And that will - as in other countries - lead to that being reflected in interest rates."
Mr de Guindos predicted that the €100bn in bank rescue funds would become available by early November, once the banks' restructuring plans are unveiled in the middle of this month.
Spain's heavily indebted regions are another concern for the government. Catalonia, which announced last week it would seek €5.02bn (£3.97bn) in aid from the central government, said it urgently needs money and won't be able to wait until September, as planned. Also, the regional government of Andalucia is asking for €1bn (£792m) in funding.
Though the Spanish government is reluctant to accept conditions that would likely be imposed as part of a wider bailout, foreign minister Jose Manuel Garcia Margallo signalled his country is willing to surrender some sovereignty as part of efforts to draw a line under the eurozone crisis.
He said Spain hoped to make progress toward greater European banking, fiscal and political union.