FRANKFURT (MNI) – Ahead of the ECB Governing Council meeting
Thursday, Spanish Prime Minister Mariano Rajoy said Spain needs a “quick
solution” that will remove doubts about the euro and help Spain
refinance its debts more cheaply.
In an interview with German daily Frankfurter Allgemeine Zeitung,
Rajoy said risk premiums and yield differentials were “destroying”
Spain’s efforts at fiscal reform, though he also said his government
remains committed to reaching the EU Commission’s target of a 6.3%
budget deficit for this year.
Rajoy did not say — nor was he asked — whether or
when Spain planned to apply for a further aid program under the ESM
rescue fund, which the European Central Bank has set as a condition for
intervening in bond markets.
The ECB’s “mandate is to keep inflation under control. But I think,
guaranteeing that a functioning monetary union also belongs to this,”
said Rajoy, who will be meeting with German Chancellor Angela Merkel
later Thursday in Madrid.
Noting Spain’s heavy refinancing needs toward the end of this year,
Rajoy said lowering bond yields was “urgent and necessary. The risk
premiums are not the result of the fundamentals of the Spanish
economy, but of doubts about the euro. That is why I focus so much on a
quick solution.”
Rajoy said 2012 economic activity in Spain could be “somewhat
better” than the government’s forecast of a 1.7% contraction, and said
“I hope that next year for many reasons will turn out better.”
“It is especially important that all the uncertainties around the
euro are removed and that we can once again refinance at reasonable
rates,” Rajoy said.
— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com —
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