|A woman gives money to a beggar on a street in Pontevedra, northwest Spain June 15, 2012. (Reuters/Miguel Vidal)|
The EU and Spain are trying to come to terms over a rescue plan for the debt ridden European economy. The government remains unwilling to apply for international aid, but analysts say asking for a bailout is essential.
A new Spanish rescue programme to be announced next Thursday will be focused on the measures international lenders would ask in return for a bailout. As the ECB money always comes with strings attached, Spanish Prime Minister Mariano Rajoy is doubtful whether the country should ask the eurozone’s €500bn rescue fund, the European Stability Mechanism, to begin purchases of Spanish sovereign bonds. He fears EU monitors would demand tough conditions in return.
Spain's battle to regain investor trust in its governmental finances has been tough on households and businesses. The economic crisis has left the country with near 25% unemployment, and austerity measures and reforms aimed at reining in debt have triggered street protests and sparked some regional tension.
Spanish borrowing costs have been falling significantly, as the European Central Bank pledged two weeks ago to buy unlimited amounts of government bonds to help debt ridden economies out of trouble. High demand and lower interest rate for Spanish 10 – and 3 – year bonds in Thursday’s auction also indicated growing investor confidence. Ramon Zarate of Madrid's Emasl financial consulting group, described Thursday as a “purely a cosmetic image.”“Nothing has changed,” he said.
Continue Reading: Spain reluctant to accept EU cure — RT