Madrid: Economy Minister Luis de Guindos has said in an interview that although Spain is finally asking for help from the European rescue fund there will be no new cuts or tax increases because those the govenment has already approved “will be enough” to reduce the deficit.
On Aug 24 the government will approve a decree in which the so-called “bad bank” to manage toxic securities will be set up, there will be changes in the Ordered Banking Restructuring Fund, or FROB, and a reform will be dealt with to avoid “abuses” by financial entities, De Guindos told the ABC newspaper Sunday.
Regarding the aid that may be requested from the European rescue fund – a door opened by Prime Minister Mariano Rajoy last Friday – De Guindos admitted that he does not yet know precisely and in full how the procedure will be implemented.
Consequently, Spain will wait to learn the details and act “with prudence” in the face of the offer by European Central Bank president Mario Draghi to buy sovereign bonds from countries that are in financial predicaments if they ask for that type of help.
The economy minister said that Draghi had sent “two very clear signals” – that the differences in the cost of financing among the Eurozone countries are not acceptable and that it has been decided to intervene in the debt market via formulas that will be made more concrete in the coming weeks.
As details continue to be made known, a “precise calendar” will be able to be developed, the minister emphasized, adding that the Spanish treasury is financing itself “relatively well” in the markets under the circumstances.
He insisted that, whatever the process ultimately is, “a substantial part of the (Spanish budget) adjustment” has been made and there are no new measures on the table, because those approved to date will be sufficient to fulfill Madrid’s deficit reduction commitment to Brussels.
“We are fulfilling our part and nobody doubts that we’re going to continue doing that. For this commitment to be put on paper or not is not important,” De Guindos added, going on to say that the relevant thing is for the European partners not to doubt Spain, which has given “more than enough signs that it deserves that confidence”.