News24

No need for Spain bailout right now - PM

2012-12-14 20:01

Madrid - Spain's Prime Minister Mariano Rajoy insisted on Friday that his country currently had no need of a bailout from the Eurozone to fix its public finances.

Spain will seek help to ease its borrowing costs if necessary, but "currently we do no need to and therefore we have not asked for it", he told Cadena Ser radio.

Rajoy has for months been fending off speculation that Spain will seek help from Eurozone emergency funds, which would trigger supportive action by the European Central Bank.

"We will use this mechanism only if necessary for the interests of the Spanish people," said Rajoy, interviewed on the sidelines of a European Union summit in Brussels.

He spoke a day after European leaders approved a new system of banking supervision for the Eurozone, a key move for Spain, the bloc's fourth-biggest economy.

Spain has had to seek a Eurozone bailout for its banks, ruined by financial turmoil in recent years, and speculation mounted that it would have to seek aid when its borrowing costs surged to danger levels in July.

But Rajoy has held off from making such a demand and Spain has managed to complete its financing operations for 2012 without outside help.

Figures released by Spain's central bank on Friday showed that the level of debt owed by Spanish banks to the European Central Bank decreased for a third month running in November, to €340.8bn.

This indicated that Spanish banks were finding it easier to raise money on regular financial markets, a sign of recovering confidence in the sector whose collapse has fuelled a bitter recession in Spain.

Other data from the Spanish central bank Friday showed that Spain's public debt rose to a fresh record at 77.4% of gross domestic product in September and was forecast to reach at least 85.3% by the end of 2012.