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Spanish PM says seeking European aid not off the table

Source : IANS
Last Updated: Thu, Nov 01, 2012 05:50 hrs

Madrid, Nov 1 (IANS/EFE) Spanish Prime Minister Mariano Rajoy told Parliament Wednesday that he may seek a European bailout if he deems it in the country's interest.

Rajoy spoke to lawmakers about the possibility of Spain filing a formal request for assistance from its EU partners, a move that would trigger purchases of Spanish government debt by the European Central Bank.

The ECB's bond-buying program, announced in September to bring down borrowing costs for crisis-hit euro-zone countries, is a "very important" instrument, Rajoy said.

Spain's borrowing costs, which hit euro-era highs in July, have come down since the ECB signaled its readiness to buy sovereign debt.

"I won't rule out using (the ECB program) if necessary in the general interest of Spaniards," the conservative premier said. On Monday, in a joint press conference with Italian Prime Minister Mario Monti, Rajoy said EU aid was "not essential" at the moment.

"Just as we asked for aid for financial institutions, if I think it's necessary in the general interests (of the country), I'll do it and I'll explain it," Rajoy told parliament.

The Spanish economy remains hampered by the fallout from the collapse of a long-building housing bubble, which left many of its banks saddled with toxic assets.

This summer, Spain was forced to request a loan of up to 100 billion euros ($129.7 billion) from its euro-zone partners to prop up its ailing financial institutions.

Spain's economy contracted 0.4 percent in the third quarter and continues to face strong headwinds, the central bank said last week.

The country is mired in recession for the second time in four years and the unemployment rate stands at a record 25.02 percent.

--IANS/EFE

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