Spain says it does not need sovereign bailout
PRIME MINISTER Mariano Rajoy insisted yesterday that Spain still does not need a sovereign bailout, while one of his ministers announced that there are signs the country is emerging from the economic crisis.
Mr Rajoy made his comments after meeting with his Italian counterpart, Mario Monti, in Madrid. Both countries’ borrowing costs have soared to dangerous levels at various times over recent months, prompting the European Central Bank to propose a bailout option that would involve the buying-up of sovereign debt in order to bring bond prices under control.
“As soon as I think it is good for the general interests of Spain, I could request it, but the important thing is that the instrument exists,” said Mr Rajoy in a joint press conference alongside Mr Monti.
“Right now, it’s not necessary for the interests of Spaniards.”
The extra yield investors demand to hold Spanish 10-year bonds instead of German bunds hit record highs over the summer, sparking speculation that a bailout request was imminent.
However, in recent weeks, the spread has eased somewhat.
Nonetheless, there has been increasing pressure on Mr Rajoy from Spain’s corporate sector to seek European assistance sooner rather than later.
The chief executive of lender Bankinter, María Dolores Dancausa, was particularly outspoken earlier this month, saying that “it’s better to surrender to the evidence early on and request help”.
Yesterday, Mr Monti said Italy also did not need to request EU help for the moment.
Although both leaders played down the likelihood of an imminent rescue request, Mr Rajoy admitted that borrowing costs are a serious concern and he criticised their disparity across the euro zone.
“It’s not fair to be in a bloc in which some get free financing and others have to pay so much over the odds,” he said, clearly comparing Spain’s situation with that of Germany.
In June, Spain requested a rescue for its troubled financial sector.
A recent stress test estimated that the country’s banks would need up to €59 billion in extra capital, although Spanish authorities have said they will probably only require about €40 billion.
The money has not yet been released. Meanwhile, Spanish labour minister Fátima Báñez yesterday said that there are hopeful signs that the country is “coming out the crisis”.
Ms Báñez said she based her optimism partly on the country’s tourism industry, which has been one of the few sectors to weather the recession.
Figures released yesterday showed that foreign visitors spent €45 billion in Spain in the period January to September, up 7 per cent from the same period in 2011.
The minister added that Spain’s international economy and a well-trained generation of young people were further reasons for optimism.
However, she made her comments just three days after announcing the highest quarterly jobless figures on record, at 25.1 per cent.
While Ms Báñez said a labour reform the government introduced earlier this year is helping businesses bounce back from the downturn, critics have accused the legislation of deepening the employment crisis.
Also, retail sales fell 11 per cent in September compared with a year ago, according to figures released yesterday by the National Statistics Institute.
Last week, the Bank of Spain estimated that the country’s gross domestic product fell for a fifth quarter.