Open

Coming up

Don't miss

Replay


LATEST SHOWS

FASHION

Who's next in Paris, an event with international ready-to-wear and fashion accessories collections

Read more

IN THE PAPERS

Is there such thing as 'telegenic' victims of war?

Read more

IN THE PAPERS

2014-07-22 07:21 IN THE FRENCH PRESS

Read more

THE INTERVIEW

Michel Sidibé, UNAIDS Executive Director

Read more

TALKING EUROPE

Dalia Grybauskaite, President of the Republic of Lithuania

Read more

WEB NEWS

Online scammers exploit MH17 crash

Read more

MEDIAWATCH

Too many graphic images from Gaza ?

Read more

MEDIAWATCH

Gaza: online reactions

Read more

BUSINESS DAILY

Rise of the Robots

Read more

  • Hollande says French warship delivery will ‘depend on Russia’s attitude’

    Read more

  • Israeli soldier missing in Gaza, say media reports

    Read more

  • Ukraine rebels release bodies, black boxes from flight MH17

    Read more

  • A call for harmony in riot-hit ‘Little Jerusalem’ Paris suburb

    Read more

  • Widodo poised to become Indonesian president

    Read more

  • An ‘explosion of violence’: French press reacts to Gaza protests

    Read more

  • Notorious ‘VIP’ prison in Paris closed for renovations

    Read more

  • Christians in Iraq's Mosul face execution or exodus

    Read more

  • Scores killed as Libyan militias fight over airport

    Read more

  • Ukraine football players refuse to return home after friendly in France

    Read more

  • China steps up communist education to guard against ‘moral decline’

    Read more

  • French rugby stars attacked with machetes and swords

    Read more

  • Hollande announces new military operation in West Africa

    Read more

  • Kristoff wins Tour’s flat Stage 15

    Read more

Europe

Spain's new government may ask for international aid

Text by News Wires

Latest update : 2011-11-25

Spain's new government said Friday they are considering international aid, either in the form of a credit line from the IMF or funding from the European Financial Stability Facility, in a bid to get the country's faltering economy back on track.

REUTERS - Spain’s new centre-right government, due to be officially sworn in mid-December, is considering applying for international aid as one of its options to shore up its finances, sources close to the party say.

The People’s Party (PP) inherits an economy on the verge of recession, a tough 2012 public deficit target, rising financing costs on nervous debt markets and a battered bank sector with billions of euros of troubled assets on its books.

"I don’t believe the decision (to seek aid) has been made .. but it is one of the options on the table, because I’ve been asked about it. But we need more time and more information on the current state of things," one source told Reuters.

If extra funding is needed, either from the European Financial Stability Facility (EFSF) or a credit line from the International Monetary Fund, it would be politically preferable to make the decision independently and quickly, rather than being compelled by market forces at a later date.

"If we have to do it, we have to do it now," the source said.

When asked about seeking outside aid, a PP official declined to comment.

The IMF on Tuesday increased its lending instruments and launched a six-month liquidity line, offering help to countries with solid policies that may be at risk from the euro zone debt crisis.

The Fund did not say which countries would qualify for the credit line, though it would act as 'insurance against future shocks and as a short-term liquidity window to address the needs of crisis bystanders'.

A senior economic consultant to the PP told Reuters an application for IMF credit was just one option on the table. In itself it would be insufficient and considered a transitory move, the consultant said.

One of the possible functions of the euro zone’s EFSF rescue fund, which the bloc’s policymakers are grappling with making more potent, will be to offer precautionary credit lines to prevent a member state from running into financing difficulties.

Incoming Prime Minister Mariano Rajoy has not made an official appearance since his victory speech after the party trounced the Socialists on Sunday, and gave few details of his economic plans during the campaign.

This week he has been meeting with the heads of Spain’s biggest banks to make a fuller assessment of the nation’s economic health and decide what his first moves must be, the source said.

Rajoy has pledged to stick to a deficit target of 4.4 percent of gross domestic product in 2012 which would require huge spending cuts, as well as a deeper overhaul of the financial sector hit by the collapse of the property sector.

In 2012, Spain’s Treasury must pay back around 120 billion euros in debt redemptions while also financing its deficit. That amounts to at least 200 billion euros.

Spain’s problems could be solved if the European Central Bank adopts a policy of quantitative easing—effectively printing money to buy sovereign bonds. But there is strong opposition to that from Germany and within the ECB.

"Spain would opt for (the ECB solution) first but if that doesn’t happen we will have to get external financing," the consultant said.

Date created : 2011-11-25

  • SPAIN

    ‘No miracles’ warns Spain’s new prime minister-elect

    Read more

  • SPAIN

    Spain goes to the polls amid economic turmoil

    Read more

  • FINANCE

    IMF creates new loan programme to ward off debt crisis

    Read more

COMMENT(S)