Spain analysing bailout options
- Published: 5/10/2012 at 06:49 PM
- Online news:
Spain's government said on Friday that it was in talks with European institutions and analysing its options before deciding on any sovereign bailout.
Men dressed in bathrobes and swimming trunks hold placards reading "No more social cuts. No military spending" during a protest in Bilbao on Tuesday.
Financial markets are betting Spain will apply soon for a rescue in which the European Central Bank buys Spanish bonds on the open market to curb its borrowing costs, but only in return for strict conditions.
"The mechanisms for taking decisions in Europe are complex," Deputy Economy Minister Fernando Jimenez Latorre told Spanish journalists outside parliament in comments broadcast on national radio.
"What we are doing is talking to the European institutions and we are analysing the options," he said.
Spain's heavy debt refinancing burden and high borrowing costs are widely expected to force it to seek a bailout soon, with 30 billion euros ($39 billion) in repayments due this month.
"When we talk of a rescue, we are talking about European Central Bank intervention in the secondary market," Latorre said in further comments reported by Europa Press news agency.
In other countries such as the United States, Britain and Japan, central banks had intervened "rapidly and significantly" on secondary debt markets to ease financing difficulties, he said.
"In Europe, these interventions are more complex and the Spanish government is analyzing all the implications and procedures to take the most beneficial decision," Latorre said.
Economy Minister Luis de Guindos told an audience in London on Thursday evening that Spain "does not need a bailout at all".
He was apparently referring to a classic bailout such as the huge international loans given to Greece, Portugal and Ireland when they were unable to afford to borrow on the financial markets.
"In Spain what we have is a proposal from the ECB to trigger intervention on the secondary market with certain conditions," De Guindos explained.
"They want certain conditionality that I don't think are very far from the situation that we have now in Spain."
Spain has unveiled an austerity budget for 2013 and revealed a lower-than-expected price tag for saving its banking system, two moves considered likely to ease the way to a bailout.
The European Central Bank outlined on September 6 a plan to buy the sovereign bonds of stricken states on the open market.
But it would do so only after Spain submits to conditions imposed by the European Stability Mechanism, which could act in tandem with the ECB by purchasing newly issued Spanish government bonds.
Spain's borrowing rates dropped sharply after the ECB revealed its bond-buying plan but crept up again later as Prime Minister Mariano Rajoy hesitated to seek help.
About the author
- Writer: AFP
Position: News agency