Arab Today, arab today spain holds bailout at bay after debt test
Last Updated : GMT 23:05:53
Arab Today, arab today
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Spain holds bailout at bay after debt test

Arab Today, arab today

Arab Today, arab today Spain holds bailout at bay after debt test

Madrid - AFP

Spain fended off pressure Thursday for a full bailout to end its financial crisis, its economy minister insisting it did not need rescuing \"at all\". The eurozone\'s fourth-biggest economy passed a key test of confidence when its borrowing costs mostly eased in a bond auction, and won praise from the European Central Bank for its crisis reforms. In a speech in London, Economy Minister Luis de Guindos insisted that Spain \"does not need a bailout at all,\" and is \"a competitive and sustainable country\". Earlier in the bond sale, Spain showed it can still tap the markets for financing, raising 3.99 billion euros ($5.2 billion) in two-, three- and five-year bonds, at interest rates that were mostly lower. Pressure remained however, with analysts warning that financial markets were counting on a bailout and the governor of the Bank of Spain casting doubt on Spain\'s fiscal targets and economic outlook. \"The most urgent problem facing the Spanish economy is recovering the trust of the markets,\" the Spanish central bank\'s governor, Luis Maria Linde, told a parliamentary committee. Facing a recession that has left one in four workers unemployed, a bulging deficit and high borrowing costs, Spain remains under pressure from markets and some eurozone partners to seek a full bailout. Some eurozone powers such as Germany, however, are reluctant for Spain to seek a rescue while it still has access to market financing. The ECB has outlined a plan to buy Spanish bonds on the open market to curb interest rates, but only if Madrid applies for a bailout and submits to strict conditions from European bailout funds. ECB chief Mario Draghi lauded what he called Spain\'s \"remarkable\" progress in passing reforms of its labour market and banking sector, as demanded by European authorities. Speaking Thursday after the ECB\'s monthly rate-setting meeting, he cited progress made on fiscal consolidation, structural reforms and the struggling banking sector but warned that \"significant challenges\" remained. Spain\'s borrowing rates dropped sharply after September 6 when the ECB revealed its bond-buying plan but crept up again later as Prime Minister Mariano Rajoy hesitated on the bailout. \"If Spain continues to delay seeking a bailout, the markets may get nervous,\" said Daniel Pingarron, an analyst at brokerage IG Markets. \"They will reward Spain if it seeks a bailout and punish it if it waits too long.\" Asked on Tuesday whether such a request was imminent, Rajoy replied simply: \"No\". \"Investors are still waiting to know what decision the Spanish government will finally take over a possible request for help so that the ECB, in the secondary market, and the European rescue funds, in the primary, can lower its elevated financing costs,\" brokerage Link Securities said in a report. \"October will be a \'test of fire\' for the Spanish government as our country faces payments on its sovereign debt of 30 billion euros.\" Spain\'s central bank head warned Thursday the nation may miss its 2012 public deficit target and slip into a deeper-than-expected recession next year as pressure grows for a sovereign bailout. To regain market trust Spain must meet its deficit-cutting targets, clean up the banking sector, cut private and public debt and deepen reforms to boost competitiveness, Linde said. Spain is already veering from its target to slash the public deficit, he added. \"Given the importance of meeting it, additional measures will have to be considered to make it possible.\"

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Arab Today, arab today spain holds bailout at bay after debt test Arab Today, arab today spain holds bailout at bay after debt test

 



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