Spain is meeting conditions for funds: Rajoy

Spain will consider seeking extra aid from Europe on top of a €100bn rescue of its financial sector but does not see any need for new conditions, said prime minister Mariano Rajoy.

Rajoy said he wanted to see details of the ECB’s programme to buy debt of eurozone countries with high borrowing costs before deciding whether to proceed with a request. “If I believe it is good for Europe as a whole, for the euro, and for Spain, I will do it, and if not, not,” he said.

On Thursday, ECB board member Joerg Asmussen said the ECB should only buy sovereign bonds of troubled eurozone states if the IMF was involved in setting conditions.

Spain is already struggling to implement austerity measures to reduce its debt burden and rescue banks hit by a collapse in property prices, and Rajoy is reluctant to undertake any more for fear of being caught in a recessionary spiral.

But Germany fears that the bond-buying plan to help Spain and other indebted eurozone countries lower their borrowing costs will expose it to too much risk, leaving the ECB with a delicate negotiating task.

German central bank chief Jens Weidmann threatened to resign on Friday over the bond-buying plan as ECB president Mario Draghi tries to hammer out a deal before an ECB policy meeting on Sep 6.

Rajoy’s comments came ahead of a visit by German chancellor Angela Merkel later this week to Madrid.

To receive aid from the European rescue funds, Rajoy said Spain did not need to meet any further conditions than it already is under the terms of the banks rescue and the excessive deficit procedures.

Rajoy also said he felt Draghi agreed with him that Spain’s high borrowing costs were related to investor fears over the euro rather than the fundamentals of the Spanish economy.

He said the current situation in which some European countries financed themselves at negative rates and others paid “unsustainably high rates” had to end and measures had to be taken to dispel “with all clarity and decisiveness the doubts over the continued existence of the euro”.

In a sign he hoped Merkel would persuade reluctant German officials to back the ECB plan, Rajoy praised her as someone who governed “with great soundness”.

— Reuters