European finance ministers are growing increasingly impatient with the Spanish as they urge Mariano Rajoy’s government to clarify whether they will be seeking financial aid from their European partners.
Spain has already claimed a €100 billion to repair its broken banking system and is seeking the softest conditions possible before asking for a full scale sovereign bailout. Creditors are unwilling to commit to giving Rajoy anymore cash unless he takes further steps to increase growth and cut back the country’s debt.
“If there will be support, there will be conditions,” Dutch Finance Minister Jan Kees de Jager told reporters before a meeting of euro-area finance chiefs in Nicosia, Cyprus today. “Spain is on the right way but they have to continue to convince the markets that they have a sound policy.”
EU finance ministers want a decision as soon as possible in order to cash in on the current strength of the Euro and high level of optimism sweeping the region. Spain is in a dilemma as it doesn’t want to commit to a scheme that could inflict similar pain on its citizens as seen in Greece and damage its reputation.
The Spanish Finance Minister Luis de Guindos has been deflecting questions from the media and EU ministers at the Eurozone finance ministers meeting in Cyprus. So far he has refused to comment on whether Spain would make an aid application.
“It is much more important to meet our public deficit targets and comply with our programme of reform than a potential rescue,” De Guindos told reporters when asked about conditions for any financial support.
“The fundamental question here is to establish the elements of what could be an intervention of the ECB on the secondary market. I believe that’s what we will do today, although it will be in a generic way and not directly in relation to Spain.”
So far Madrid has resisted implementing austerity measures that go beyond the European commission’s recommendations. Nations such as Germany are adamant that no further aid will be granted unless it comes with tough conditions.
“I’d like them to set out their position because it hasn’t been clear over the summer what their position is,” Irish Finance Minister Michael Noonan told reporters, reflecting concern among several Eurozone countries that uncertainty over Spain is holding back a recovery from the bloc’s debt crisis.
A decision over whether Greece will receive the next instalment of its €240 billion aid package has also been put on hold as the ministers hear a progress report from the troika. Many members of the EU community want to see both situations decided upon quickly.
Ever the optimist, ECB President Mario Draghi told a German newspaper that the central bank’s new plan was already having beneficial effects.
“There have already been positive results,” he was quoted as saying in Friday’s Sueddeutsche Zeitung. “The announcement of the facility has contributed to raising confidence in the euro area, and in the euro across the world. Fund managers are bringing their money back to Europe. This is good for the euro area economy,” Draghi said.
The Pound to Euro exchange rate is currently trading at 1.237
The Pound to US Dollar exchange rate is currently trading at 1.621
The Pound to Australian Dollar exchange rate is currently trading at 1.533
The Euro to US Dollar exchange rate is currently trading at 1.310
The Euro to Pound exchange rate is currently trading at 0.807
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