PM denies Spain on verge on bailout

 

Prime Minister Jose Luis Rodriguez Zapatero insists Spain will not require an international bailout, and will "survive tensions" that are sweeping the markets. "Spain, of course, will finance itself," he told a news conference in Ankara with Turkish Prime Minister Recep Tayyip Erdogan that was carried on Spanish television. "We will survive these tensions. They are not good for our economy, but we will survive them."We have strength. We have taken measures for that and we planned for the scenarios that we might face in the last part of this year." His remarks came a day after a union leader claimed that Zapatero told unions on August 17 that Spain was on the verge of a financial rescue. But the Labour Union chief, Ignacio Fernandez Toxo, backtracked on Tuesday, saying Zapatero did not, in fact, use those words. Madrid's IBEX-35 index of leading shares fell 1.61 per cent by the close to fall to 7936.4 points, below the symbolic 8000-point barrier. On Monday, the market closed down 4.69 per cent. Spain's biggest unions were holding an evening march in Madrid to protest against a legislative reform that will enshrine balanced budgets in the Spanish constitution. "The reform of the constitution to guarantee long-term budget stability is a reform that helps us maintain our credibility to keep up our financing capacity and reduce tensions," Zapatero said. He called for "concerted action between Europe, America, emerging countries and the IMF" in order to "regain growth momentum and support the liquidity of the financial system". Finance Minister Elena Salgado earlier also denied that Spain had been on the verge of needing a financial rescue itself. "Like other countries we suffered debt market tensions in August and that led to the ECB intervening, but since then we have been very far from a rescue," she said. Under the constitutional change, Spain must stick to a long-term deficit cap except in times of natural disaster, recession, or extraordinary emergencies and even then only with approval of the lower house of parliament. Although unions oppose the change, it easily swept through the lower house with support from both the ruling Socialists and conservative opposition Popular Party. It is expected to cruise through a Senate vote Wednesday.