Spain and Portugal not comparable to Greece: OECD head

4th May 2010, Comments 0 comments

The head of the OECD on Tuesday said the economies of Spain and Portugal's were not comparable to that of Greece as the Spanish stockmarket shed more than three percentage points amid fears of downgrades to the nation's credit rating.

Comparisons between Greece on the one hand and Spain and Portugal on the other "do not reflect reality," Angel Gurria, Secretary General for the Organization for Economic Cooperation and Development, told journalists in Rome.

"Spain has a debt-to-GDP ratio about half that of Greece more or less, so obviously (it is) a completely different situation. Spain had four or five years of surpluses before the crisis," he said.

Greece's debt-to-gross domestic product ratio is 115.1 percent, compared to just 53.2 percent in Spain.

"I think that we should be very careful and very responsible in order to avoid comparisons that don't apply," Gurria said.

Standard & Poor's last week lowered Spain's long-term sovereign credit rating to AA from AA+ on prospects that its recession could further weaken public finances.

On Tuesday the benchmark Ibex-35 share index shed 3.27 percent to 10,082.10 points shortly after noon (1000 GMT) with shares in Spain's biggest bank, Santander, and the country's second-largest bank, BBVA down by over four percent.

Yves Marcais, a dealer in Paris with Global Equities, said "a rumour was circulating in markets that Spain would need 280 billion euros" and could ask for them from the International Monetary Fund.

"At the moment that I am speaking to you, the rating for Spain is still triple A, with a stable outlook," a Fitch spokeswoman told AFP in Paris early on Tuesday.

Spain on Thursday will issue five-year bonds with a proposed interest rate of 3.0 percent that will expire on April 30, 2015. It hopes to raise at least two billion euros.

The Portuguese parliament is expected to approve this week a first set of austerity measures aimed at cutting the public deficit from 9.4 percent in 2009 to 8.3 percent of gross domestic product this year.

© 2010 AFP

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