Spain's Rajoy studies rescue, says may not be necessary

Wed Sep 12, 2012 6:26am EDT
 
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By Tracy Rucinski and Terhi Kinnunen

MADRID/HELSINKI (Reuters) - Spain continues to study the price it will have to pay for seeking help from the European Central Bank's bond-buying program but improved market conditions may make aid unnecessary, Prime Minister Mariano Rajoy said on Wednesday.

"I don't know if Spain needs to ask for it," Rajoy told parliament in a debate session, referring to an international rescue for Spain.

Yields on Spanish bonds have fallen dramatically, to five-month lows, since the ECB agreed last week to launch a new bond-buying program to reduce struggling euro zone countries' borrowing costs provided they first request assistance from the euro zone's rescue fund and abide by strict conditions.

Earlier, in an interview with Finnish newspapers, Rajoy said he had no objection to the International Monetary Fund monitoring Spanish compliance with the conditions for any assistance although he has also insisted that no fresh demands should be made on Spain in terms of cutting debt.

"The IMF is already monitoring our economy," Helsingin Sanomat quoted Rajoy as saying during a visit to Madrid by Finnish Prime Minister Jyrki Katainen on Tuesday.

Spain, which has already secured European rescue funds of up to 100 billion euros ($128.5 billion) for its troubled banks, is also struggling with its fiscal deficit, indebted regions and pressure from credit rating agencies.

"In addition to growth, the only option I am considering is using the central bank's announced mechanism," Rajoy said, according to Helsingin Sanomat.

"It is completely ruled out that we would ask for a bailout for the whole country," he told business daily Kauppalehti.   Continued...

 
Spanish Prime Minister Mariano Rajoy gestures during a parliamentary session at Spanish parliament in Madrid September 12, 2012. REUTERS/Andrea Comas