Spain is considering seeking help from the European Central Bank’s (ECB) bond-buying program, but is not planning a full sovereign bailout, Spanish Prime Minister Mariano Rajoy was quoted as saying yesterday in Finnish newspapers.
He also said he had no objection to the IMF monitoring Spanish compliance with the conditions for any assistance.
“The IMF is already monitoring our economy,” Helsingin Sanomat quoted Rajoy as saying in an interview during a visit to Madrid by Finnish Prime Minister Jyrki Katainen on Tuesday.
The ECB agreed last week to launch a new bond-buying program to reduce struggling eurozone countries’ borrowing costs provided they request assistance from the eurozone’s rescue fund and abide by strict conditions.
Spain, which has already secured European rescue funds of up to 100 billion euros (US$128.5 billion) for its troubled banks, is also struggling with its fiscal deficit and pressure from credit rating agencies.
“In addition to growth, the only option I am considering is using the central bank’s announced mechanism,” Rajoy said, according to Helsingin Sanomat.
“It is completely ruled out that we would ask for a bailout for the whole country,” he told business daily Kauppalehti.
His comments indicated Spain may apply for a precautionary assistance program under which the eurozone’s rescue funds could buy Spanish bonds at issue without the country being taken off the credit markets, rather than the kind of full sovereign bailout granted to Greece, Portugal and Ireland.
The conditions on a precautionary program would be lighter, and the cost to the rescue funds of supporting the eurozone’s No. 4 economy would be lower.
Rajoy said his government would carefully study the strings attached to the ECB’s bond program, but added that he would not be told what to do with the budget.
“I am prepared to decrease the deficit, but others cannot decide how it will be reduced,” he said.
Rajoy said in a TV interview on Monday he would not touch pensions, although many economists believe reducing unsustainable pension costs would be a likely condition for any assistance program.