Tag Archives: Spain

Bundesbank Rejects Debt Purchase

 

BERLIN – The Bundesbank said on Monday he remains critical of the European Central Bank’s plan to intervene in the bond market to reduce the cost of financing in Spain and Italy, adding that this is the responsibility of states and not central banks.

The Bundesbank opposes the plan of the ECB President, Mario Draghi, to restart the program to buy bonds on the ground that involves a monetary financing of government, in breach of European law.

The bank said in its monthly report, issued Monday, the volume of buying bonds “could be unlimited and should in any case be enough.”

“The Bundesbank remains critical to the purchase of government bonds of the euro system, which brings considerable risks to stability,” the Bundesbank said.

“Decisions about the possibility of an even wider pooling of risks of solvency must be rooted in financial policy, which means the governments and parliaments, and should not occur through the balance sheets of central banks.”

 

 

Spain Prepares Additional Adjustments

 

MADRID – The tough economic adjustment measures approved this week by the Government of Spain will have a positive impact on the public accounts of 56.400 million euros over the next two and a half years, according to a official document released Saturday.

The figure would be below the 65.000 billion euros, said Wednesday by President Mariano Rajoy, and would be generated through new tax increases and tax cuts, that is intended to convince Europe and investors that the country is serious about implementation of reforms.

The gap of 8.600 million will be covered with a series of measures such as energy taxes, which are expected to be announced later this month.

“The estimated impact of these measures is approximately 13.500 million in the remainder of 2012, 22.900 million in 2013 and 20.000 million in 2014,” said the Spanish government in a note.

“This estimate excludes the impact assessment for further action, such as energy and environmental taxes to be announced shortly,” he added.

Of the 56.400 million forecast for revenues to date, about 29,000 million will come from changes in tax rates and 27.000 million budget cuts.

Spain needs to eliminate 65.000 million of its budget deficit to reach the goal of EU fiscal gap of 2.8 from 2014.

The publication of the document comes a day after Finance Minister Cristobal Montoro, refused to put specific figures to fit in the presentation of the new reform plan to cut the bloated budget deficit.

Thousands of people demonstrated in Madrid on Friday after learning of the new cuts that led to police intervention and left some detainees.

 

 

Spain Will Ask Help from Europe

 

BRUSSELS – Saturday, Spain became the fourth country to ask for help from the beginning of the debt crisis in Europe.
The country will order financial assistance to its partners in the eurozone, but not until you have a clear idea of ​​the amount of capital that banks need from private audits will be completed in a few weeks, told Reuters on Saturday three sources of the European Union (EU).

Spain said during a teleconference with the finance ministers of 17 countries in the euro area would aid its banks, but could not specify the amount until Oliver Wyman and Roland Berger (two independent consultants) present its assessment of capital requirements by 21 June.

“They want the help, but only say how much money is in a few days,” said one source.

A bailout of faltering banks in Spain could reach up to 100,000 million (125,000 million) once it is requested by Madrid.

It is unclear whether the figures are defined Rescue on Saturday, but the International Monetary Fund (IMF) gave a clear guide to what you think is needed to say that in a scenario of “stress”, several Spanish banks need additional capital 40.000 million. However, the agency advised to collect more than that.

“Going forward will be critical to clearly communicate the strategy to provide a deterrent credible to the scarcity of capital, a brake as experience shows, it is better to overestimate than underestimate,” Ceyla Pazarbasioglu, assistant director of the Monetary Department and Capital Fund, said in a statement .

Eurozone leaders want to strengthen the position of Spain before the Greek elections of June 17, which could bring the country Hellene a block output and unleash a wave of contagion.

Members of the Government in Spain have said that in practice, the parameters of the audits of the IMF and private firms are the same, implying that Spain could make your request for assistance based on figures from the bottom instead of waiting to another report.

Meanwhile, the president of the Bundesbank, Jens Weidman said that Spain should use available tools, such as the European Financial Stability Fund (EFSF), if they feel overwhelmed by their financial needs.

Although all indications are that Spain will join Greece, Ireland and Portugal to receive a European bailout, officials say that the aid would focus only on its banking sector, without taking the Spanish state of credit markets.

That would be crucial to avoid overloading the bailout funds from the euro area, which would struggle to cover the costs of the Spanish debt over the next three years, plus possible additional assistance to Portugal and Ireland.

Any political conditions on aid would not be excessive, would be related to banks and probably adding to the austerity measures and structural economic reforms that the Government of Rajoy has already started, sources said the EU and Germany.

Loan, not bailout: Spain

The Spanish government admitted his intention to seek foreign funding to capitalize the banks.

At a press conference at the headquarters of the Ministry of Economy of Spain, the portfolio holder, Luis de Guindos, said it’s not a bailout but a loan.

The official noted that the amount will be sufficient to meet the needs and added a “significant cushion” in addition there will be no macroeconomic conditions, since the measure is limited to the financial sector.

They argued that the loan application to the EU to the Spanish banks will only conditions for financial institutions, so it is excluded country’s economic policy.

In Guindos, downplayed the Spanish prime minister, Mariano Rajoy, has not appeared to explain the application of EU aid to Spanish banks.

Rajoy said that was not brought “by a very simple question, I am the member of the Eurogroup and the Prime Minister”.

In the press conference, the Spanish minister said that this is a loan on highly concessional terms, better than the market, and that “will not leave the slightest loophole for doubt.”

He said that the injection is made through the Rescue Fund Management Banking (FROB), which will interface and divert government entities need.

Ministers confirm agreement

The 17 finance ministers from the eurozone reported that Spain will “soon” formal request for assistance to its members and will receive up to 100,000 million (125,000 million) once the application is processed.

After a conference of more than two hours, the ministers said in a statement that financial assistance would be provided by some of the two mechanisms rescue the block, the EFSF or MEDE, and would be designed to recapitalize banks Spain going through more trouble.

German recognition

German Finance Minister, Wolfgang Schaeuble, recognized Spain for its decision to seek help from their partners.

Madrid said he was “big steps” to control their economic and financial problems and was on the right track.

“It has launched structural reforms. Spain, and this is what they are saying all international institutions, is on the right track,” he said.

Schaeuble believes Spain can control its banking problems.

Deficit Ended 2011 with Deviation of 2.5 Points on PSOE Forecast

 

All the government closed 2011 with a deficit of 91.344 million. The Minister of Finance and Public Administration,Cristobal Montoro, announced that the GDP is 8.51%, compared to the 6% forecast.

At a press conference, Montoro has reported that the deficit recorded last year for the state is 5.10% of GDP (against 4.8% expected), the regions, 2.94% (compared with 1, 3% predicted) and local authorities, the 0.38% (compared to 0.30% predicted). Meanwhile, Social Security ended the year with a deficit of 995 million euros, 0.09% of GDP, while the target predicted a surplus of 0.4% of GDP.

In his view, this diversion of Social Security is “disturbing” because it is speaking of “the public pension system” and emphasized that we have to clean it up more. Montoro has indicated that these data, confirm the imbalance of public accounts that has been 2.51 percentage points higher than the fiscal consolidation target of 6% last year, committed by the Spanish Government to the European Commission. Montoro has refused to blame the deficit diversion to the regions and said it has been a lack of central government “derogation” from the financing system. “We should not blame anyone.  We are all autonomous communities”, he stressed.

In this regard, Montoro reiterated that there is a need to devise a system, to see how public services are financed independently by the administration that manages them. Montoro also stressed the importance of budgetary stability law to control the institutions and avoid a deficit and breach of targets.