Spain does not need a EU bailout ‘at all’: minister

FULLY CONVINCED::Spain’s economy minister defended the country’s reform measures, saying that they were necessary for economic stability


Sat, Oct 06, 2012 - Page 15

Spain does not need a bailout “at all,” its economy minister Luis de Guindos said in a speech in London on Thursday as concerns swirled around the eurozone’s fourth-largest economy.

“Spain does not need a bailout at all,” he said in an address at the London School of Economics, insisting that Spain was “a competitive and sustainable country.”

“What we are doing is what we think is the correct thing not only for Spain but for the future of the eurozone. We are convinced that we will be able to bring investors interested on the assets of the bad bank,” he added.

De Guindos’ speech was interrupted by a group of young protesters who waved placards “Spain for sale,” and screamed “the people are paying the price.”

The minister said the “measures were necessary” to stabilize the Spanish economy and return it to growth.

“We are fully convinced that we don’t have another alternative taking considering that public deficit of Spain was extremely high,” he said.

Spanish Prime Minister Mariano Rajoy had on Tuesday denied Spain was planning to make an “imminent” demand for a sovereign bailout from the eurozone to end its financial crisis, but it did little to calm the markets.

The conservative leader dismissed media reports that his government was set to formally request a bailout as soon as this weekend.

Separately, the global banking lobby IIF on Thursday called for the EU to slash the interest rate on its rescue loans to Greece to give it room to get its economy back to growth.

Saying that further harsh austerity is only making things worse across Europe, the Institute for International Finance said Greece and all of Europe’s most troubled economies need relief from tough short-term fiscal targets to get back to growth.

“It is urgent to complete the ongoing review of Greece’s program with an extension of the time schedule of budget deficit targets,” the IIF said as Athens huddled in talks with its key lenders the EU, the IMF and the European Central Bank.

“The latter can and could be accommodated without additional new financing by lowering interest charges on official credits in line with markedly reduced funding costs,” it said.

IIF chief Charles Dallara said the EU could cut the rates on loans to Athens to 1 percent from around 4 percent, without losing any money given current ultra-low interest rates.

He pointed out that commercial banks already agreed to write off 53 percent of the face value of 206 billion euros (US$268 billion) in commercial loans to the Greek state as part of the second Greek rescue deal early this year.

The IIF also said that Portugal and Ireland, both of which have made progress in their grueling austerity adjustment programs, need some easing of program targets as well to restore and sustain growth.

“The have earned the right to have some wind at their back,” Dallara said.