SPAIN PORTUGAL:SPAIN HAS sought to distance itself from the renewed debt crisis afflicting smaller euro economies, insisting its austerity plans are on track and reminding investors that financial markets judge the country to be more like Italy than Ireland in terms of risk.
José Manuel Campa, deputy finance minister, told a business meeting in Madrid yesterday that Spain should be focusing on improving the country’s competitiveness and on implementing its programme to cut the budget deficit. Spain “was not Greece, is not Ireland and never will be”, he said.
He emphasised that the government was determined to cut the deficit from 11.1 per cent of gross domestic product last year to 9.3 per cent this year and 6 per cent in 2011.
However, if Spain is to raise the €3 billion to €4 billion in long-term debt it plans to issue on Thursday, as well as about €5 billion of shorter-term treasury bills today, without paying inordinately high rates of interest it needs to inspire confidence among investors.
Economists are not convinced, arguing that economic stagnation will make it harder to meet budget targets.
Economic analysts Variant Perception concluded in a report this month that while Ireland and Portugal were struggling to keep the markets open to their debt and avoid a rescue by the European Financial Stability Facility, “Spain, too, is moving nearer to the moment of truth”.
Meanwhile, Portuguese finance minister Fernando Teixeira dos Santos warned that in the markets’ eyes the chances of Lisbon turning to the international community for help had risen due to the growing fears that the euro crisis will spread.
“This has to do with the eurozone and the stability of the eurozone, and that is why contagion in this framework is more likely.
“It is not because markets consider we have similar situations. They are only similar in what concerns markets, but as I said they are very different.” He said Portugal was improving its public finances, with the outline of a budget approved. – (copyright The Financial Times Limited)
