Wednesday, August 10, 2011

Spain rejects need for bailout

Spanish Finance Minister Elena Salgado

Source: Press TV

Spanish Finance Minister Elena Salgado has completely ruled out the possibility of the need for a financial rescue from the International Monetary Fund (IMF) and the European Union (EU).

"Declarations from all the institutional representatives are the same, that Spain and our fundamentals are very far from needing a rescue, that what there is, is instability in the debt markets," AFP quoted Salgado as saying on Tuesday.

Yields in Spain fell to 5.063 percent from 5.138 percent on Monday, having briefly dropped below five percent.

"The debt market has stabilized in Europe this morning and that has been good news," Salgado said.

The finance minister emphasized that Spain's public debt, equal to 63.6 percent of gross domestic product, was far below the European Union's average of 80 percent of GDP.

Spain has set a goal of lowering the budget deficit from 9.2 percent to 6.0 percent of the GDP for 2011, a report by Barclays Capital analyst Antonio Garcia Pascual said.

To do so, the federal government has to focus on regional governments that have "hard-to-control budgets."

"The risk of fiscal slippage in the regions are likely to persist," said Pascual's report.

The report by Pascual added, "Therefore the risks of fiscal slippages in the regions are likely to persist and may remain a concern for the markets so long as more bold steps are not taken."

The Madrid stock market's IBEX-35 index of leading shares closed down 0.36 percent at 8,428.9 points, its lowest close since April 2009 and its seventh straight losing session.

So far, Greece, Ireland and Portugal have received bailout packages from the European Union.

There are growing fears that Italy may be next in line to eclipse the previous bailouts and further undermine the euro.

The European Commission, however, rejected the possibility of a debt rescue plan for Spain and Italy on August 7.

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