Monday 22 January 2018

Rajoy denies Spain will seek bailout by weekend

Spain is the focus of investor attention as Mr Rajoy struggles to deflate one of the eurozone's largest public deficits.
Spain is the focus of investor attention as Mr Rajoy struggles to deflate one of the eurozone's largest public deficits.

Blanca Rodraguez Piedra and Paul Day

Spanish Prime Minister Mariano Rajoy said a request for European aid was not imminent following a report the country could apply for help as soon as this weekend.

Rajoy made the comments after meeting in Madrid with the 17 leaders of Spain's regions.

European officials told Reuters late on Monday that Spain was ready as early as next weekend to ask the eurozone and the European Central Bank to start buying its bonds, but Germany had signalled it should hold off.

"If a news agency reports that we'll ask for aid this weekend, there can only be two explanations -- that the agency is right, and knows more than I do, which is possible, or that they are not right," Mr Rajoy said when asked about the report.

"But, if it helps, and you accept that what I say is more important than this leak, I say no (we won't ask for aid this weekend)."

Spain is the focus of investor attention as Mr Rajoy struggles to deflate one of the eurozone's largest public deficits while the country sinks deeper into its second recession in three years.

The premium Spain pays on its benchmark 10-year bond eased yesterday as investors focused on signs Madrid may be open to asking for help. The Treasury faces a new test of investor appetite tomorrow when it issues bonds maturing in 2014, 2015 and 2017.

Madrid announced further belt-tightening measures for its 2013 budget on Thursday and said it would detail some 43 structural reforms over the next six months.

The number of jobless in the country rose further in September as service-sector layoffs accelerated at the end of a busy summer tourist season, suggesting one in four of the workforce was now unemployed.

Mr Rajoy reached an agreement on fiscal consolidation with the regions, but he gave no details on how the local authorities planned to balance their accounts.

The central and regional governments will discuss at a future date how the country's deficit would be divided, he said.

This year, the central government's public deficit target is 4.5pc of gross domestic product, while the regions must reduce their own shortfall to 1.5pc of GDP. By 2014 the central government will aim for 2.7pc, while the regions will target 0.1pc of GDP.

Shut out of international debt markets and facing debt redemptions worth almost €16bn before the end of the year, five of the more indebted regions have asked for help from an €18bn fund set up by the central government.

As investors wait for Spain's decision on the bailout, ratings agency Moody's said it would publish a review on the country's sovereign debt, just one notch above junk grade, sometime this month.

The agency had been due to report on Spain before the end of September, but a Moody's spokeswoman said the review was ongoing.

People wait to enter a government-run employment office in Palma de Mallorca. Spain's jobless rate has risen further following services-sector layoffs at the end of a busy summer tourist season. REUTERS/Enrique Calvo

Irish Independent

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