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Economy
In reply to the discussion: STOCKMARKET WATCH -- Wednesday, 11 July 2012 [View all]xchrom
(108,903 posts)47. Spain secures bailout for its banks but with strings attached
http://elpais.com/elpais/2012/07/10/inenglish/1341920650_274508.html
Early on Tuesday morning the club of euro-zone nations signed an agreement that will mark both the Spanish economy and the countrys politics for a number of years to come. The Eurogroup meeting of economy and finance ministers agreed in Brussels to accord Spain the rescue package it requested last month for its banking sector (with the first 30-billion-euro tranche of the loan to be released before the end of July) and allowed Madrid an extra year to bring its budget deficit back within the terms of the Growth and Stability Pact.
Spain now has until 2014 to bring the shortfall in its books back within the 3-percent ceiling set by the EU, while the target for this year has been eased to 6.3 percent from 5.3 percent and to 4.5 percent in 2013 when it was originally due to hit the 3-percent limit.
But there were big strings attached, in particular stringent fiscal demands and complete oversight of Spains financial sector. In other words, Spain is the object of a bailout, in the full sense of the word, but one that is softer in its terms and scope than those of the three euro-zone nations intervened previously: Greece, Portugal and Ireland.
The so-called troika, comprising the European Commission (EC), European Central Bank (ECB) and the International Monetary Fund (IMF), will send inspectors to Spain every three months, and together these organizations assume de facto powers over the financial supervision of Spains banks. On top of this, Brussels has demanded new fiscal measures from Spains government on an immediate basis to ensure that Madrid can comply with its deficit-cutting obligations.
Early on Tuesday morning the club of euro-zone nations signed an agreement that will mark both the Spanish economy and the countrys politics for a number of years to come. The Eurogroup meeting of economy and finance ministers agreed in Brussels to accord Spain the rescue package it requested last month for its banking sector (with the first 30-billion-euro tranche of the loan to be released before the end of July) and allowed Madrid an extra year to bring its budget deficit back within the terms of the Growth and Stability Pact.
Spain now has until 2014 to bring the shortfall in its books back within the 3-percent ceiling set by the EU, while the target for this year has been eased to 6.3 percent from 5.3 percent and to 4.5 percent in 2013 when it was originally due to hit the 3-percent limit.
But there were big strings attached, in particular stringent fiscal demands and complete oversight of Spains financial sector. In other words, Spain is the object of a bailout, in the full sense of the word, but one that is softer in its terms and scope than those of the three euro-zone nations intervened previously: Greece, Portugal and Ireland.
The so-called troika, comprising the European Commission (EC), European Central Bank (ECB) and the International Monetary Fund (IMF), will send inspectors to Spain every three months, and together these organizations assume de facto powers over the financial supervision of Spains banks. On top of this, Brussels has demanded new fiscal measures from Spains government on an immediate basis to ensure that Madrid can comply with its deficit-cutting obligations.
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