The bank Citi believes that Spain may need international aid this year
Spain this year may need international aid program, type ‘troika’ (EU, ECB and IMF) similar to those applied to Greece and Portugal, considered on Wednesday Citi Bank’s chief economist, Willem Buiter, in a report.
“Spain should probably, in our opinion, go into some kind of troika program during 2012,” he said Buiter.
This may be necessary “possibly due to loss of market access to affordable financing terms but more likely as a condition of the ECB to continue to fund Spanish banks, now the main buyers of the new Spanish sovereign debt issues”, he said.
The report is very pessimistic about the country’s economic prospects. Thus, while the Spanish government expected a decline in Gross Domestic Product (GDP) of 1.7% in 2012, Citi predicts -2.7% -1.2% for 2012 and 2013.
“It is unlikely that the deficit promised 5.3% of GDP in 2012 and 3% by 2013 is achieved,” Buiter also considered, two days before the presentation in Madrid of a budget for 2012 that include a large budget cuts effort to reduce the deficit.
“A debt restructuring (Spanish) can be avoided but would require radical measures and structural budget level,” notes Citi, estimating that “the new government was active in structural reforms but squandered the opportunity to address the austerity budget in its first 100 days in power. ”
In recent days, international concern grew over Spain, whose financial health will be on the agenda of the meeting of finance ministers from the euro zone on Friday in Copenhagen.
The Spanish government, which should reduce the deficit by more than three percentage points a year, has already announced budget cuts of 8.9 million and tax increases by 6,300 million, after his inauguration in December.
But still has a long way to go. Several economists evaluated around 50,000 million euros of new austerity measures needed this year to achieve the objective.
Category: Personal Finance
