Brussels, 02/08/2011 (Agence Europe) - There is no rescue plan on the table for bailing out Spain, Italy or Cyprus, three eurozone countries under growing pressure from rating agencies and markets, the European Commission said on Tuesday 2 August.
On Tuesday 1 August, Spanish and Italian 10-year government bonds reached their highest levels since the creation of the eurozone, with investors fearing that the debt problem of these countries may grow worse due to the economic growth slowdown. This “spread”, which measures the risk premium between Germany and the other countries, stood at 393 base points for Spain on Tuesday morning and at 374 base points for Italy.
“The question of a programme of emergency aid is certainly not on the table”, a spokesman for the European Commission underlined in response to questions on Spain. According to the Commission, the Spanish authorities are doing everything necessary to improve the budgetary situation. The Commission remains fully confident that action is being taken and that the Spanish authorities are doing what is needed to put the economy back on track.
As regards Spain and Italy, the Commission spokesman said that both these countries are taking measures to resolve their economic problems with budgetary austerity plans. Both countries have enouh determination to carry out the reforms agreed as swiftly as possible. According to the Commission, there is nothing to prove that the situation has changed in recent days. Commission experts remain in contact with the Italian and Spanish authorities.
The Italian financial stability committee composed of the highest economic authorities of the country met on Tuesday afternoon. In Spain, Prime Minister José Luis Rodriguez Zapatero announced on Tuesday that he was delaying his departure on holiday in order to monitor the economic situation.
When asked about the situation in Cyprus, which has been marked down by both Standard & Poor's and Moody's, the Commission also said that it was not a question of rescue aid planning as the country is resolved to do what it takes to improve the fiscal situation. The Commission pointed out that this country has undertaken to reduce its public deficit to bring it down to 4% of GDP in 2011 and to 2.5% in 2012. On Monday, the largest Cypriot bank, Bank of Cyprus, had called on the government of Nicosia to take measures as quickly as possible to avoid having to call on the Commission to be bailed out.
Since the meeting on 21 July of the heads of state and government of the eurozone, technical work has been in progress with experts at the Commission and national experts getting down to the task. Experts will be working throughout the summer in order to give concrete substance to the agreement between the eurozone leaders, the spokesperson said. The agreement consists in a second bailout package for Greece (€160 billion) and mechanisms for rescuing other countries in difficulty. (L.C./transl.jl)