Ministers confident Madrid will stick to targets

EU REACTION:EURO ZONE finance ministers said they were confident Spain would honour its existing fiscal commitments because the policy conditionality tied to its bailout would be confined to the financial sector.

In a statement, after a three-hour teleconference on Saturday evening, the ministers said the Spanish government would retain full responsibility for the assistance programme and will sign the memorandum of understanding with the EU authorities.

This followed a rejection of Spain’s effort to secure an aid package in which emergency capital went directly to the banks and was not added to its national debt.

Although new policy conditions will not be imposed on the government, the ministers said that Spain will have no leeway to deviate from its present austerity policy.

“The euro group is confident that Spain will honour its commitments under the excessive-deficit procedure, and with regard to structural reforms, with a view to correcting macroeconomic imbalances in the framework of the European semester,” they said.

“Progress in these areas will be closely and regularly reviewed, also in parallel with the financial assistance.”

Commission president José Manuel Barroso and economics commissioner Olli Rehn welcomed the request from Spain and the ministers’ signal of a positive response to it. They said the commission was ready to propose appropriate conditionality for the banks.