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Winnipeg Free Press - PRINT EDITION
Spanish bailout on hold
Paul White / The Associated Press Mariano Rajoy, Spain�s prime minister, undecided on bailout request. (CP)
MADRID, Spain -- Spanish Prime Minister Mariano Rajoy has said he would consider asking for financial aid for his country only once the European Central bank has fleshed out its crisis-fighting plans for buying government bonds. This is the closest the leader has come to admitting he is considering a bailout after months of denials.
Meanwhile, to boost confidence in his country's public finances, Rajoy's government said Friday it had increased its savings plans over the next three years by 57 per cent, for a total of 102.1 billion euros ($125 billion) through 2014.
"I haven't made a decision (on a bailout) yet," Rajoy said after a cabinet meeting. "I want to know what the unconventional measures proposed by the ECB are."
A day earlier, the ECB warned it would help lower a country's borrowing costs only if that country's government applied for rescue aid from the bailout funds set up by the 17 euro countries. Such a request would come with conditions, such as extra savings cuts.
Spain's borrowing costs are high due to concern over its ability to cover huge losses in its banking sector and big debts among regional governments.
With the ECB's role in helping Spain still uncertain, the government said Friday it had submitted to the European Commission a document outlining its spending cuts and revenue increases through 2014.
A statement on the prime minister's official website said the plan will save 13.1 billion euros ($16 billion) this year, 39 billion euros ($47.8 billion) in 2013 and 50.1 billion euros ($61.4 billion) in 2014. The total is 57 per cent greater than the amount previously forecast, and Spain's regional governments will be required to contribute to the savings, the government said.
The statement forecast Spain's economy would grow 1.2 per cent in 2014, by which time it is expected to begin creating jobs.
The interest rate, or yield, on Spain's benchmark 10-year bond ended the day at 6.82 per cent, down sharply from Thursday but still dangerously high.
-- The Associated Press
Republished from the Winnipeg Free Press print edition August 4, 2012 B7
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