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Winnipeg Free Press - PRINT EDITION
Spain's banks not in as bad a shape as feared
Daniel Ochoa de Olza / The Associated Press ARCHIVES Spain�s Luis de Guindos said the country won�t need more austerity measures. (CP)
MADRID, Spain -- Spain's ailing banks won't likely need to tap all the $125.7 billion that's been made available by the country's euro partners, Economy Minister Luis de Guindos said Monday.
In a further indication Spain's economic problems are not as acute as some in the markets have been fearing, De Guindos also insisted no additional austerity measures will be needed to meet the Spanish government's deficit-reduction target. Spain is battling to avoid the same bailout fate as Greece, Ireland, Portugal and Cyprus.
However, De Guindos said Spain's most troubled bank, Bankia, will get urgent aid, while two indebted Spanish regions appealed for emergency funding to deal with a crippling liquidity crunch.
Spain's banks have an estimated $184 billion euro in problematic real estate loans and investments following the collapse of the country's property market in 2008. The other 16 eurozone countries have set aside the rescue package to help troubled Spanish lenders.
"In principle, it looks like not all of (the $125.7 billion) will be used," De Guindos told Onda Cero radio.
De Guindos said austerity policies being enacted by the government will be enough for Spain to meet its target of reducing the budget deficit to 6.3 per cent of national income this year from nine per cent last year. The government has already unveiled a $65 billion euro package of tax hikes and spending cuts.
"Spain has already set out a path which is sufficient for the problems we face," De Guindos said.
He said he didn't expect other eurozone countries to demand more economic reforms in Spain. Spain is in a double-dip recession with a near 25 per cent unemployment rate. Investors fearing Spain may not be able to pay off its debts have charged high prices for loans to the country.
-- The Associated Press
Republished from the Winnipeg Free Press print edition September 4, 2012 B7
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