Spain announces 3.0 bln-euro credit line for businesses

19th April 2009, Comments 0 comments

The Spanish government announced Sunday it will provide EUR 3.0 billion (USD 3.9 billion) in contract guarantees to small- and medium-sized businesses in a new bid to combat the economic crisis.

MADRID - The Spanish government announced Sunday it will provide EUR 3.0 billion (USD 3.9 billion) in contract guarantees to small- and medium-sized businesses in a new bid to combat the economic crisis.

Prime Minister Jose Luis Rodriguez Zapatero said the state credit agency Instituto Credito Oficial would issue the guarantees to cover services to local authorities throughout the country.

The move, to be approved at the next cabinet meeting, is aimed "at helping those who most need it to combat the economic crisis," his Socialist Party said in a statement.

The Spanish economy entered into its first recession in 15 years at the end of 2008 as the global financial crisis accelerated a downturn that was already underway in its once-buoyant property sector.

Zapatero also defended the government's plans for stimulus spending to revive the economy amid criticism from both the central bank and the conservative opposition Popular Party.

The PP "is the only party in the world that defends the cutting of public spending," Zapatero said.

"All governments know that to overcome the economic and employment crisis ... strong public intervention is necessary," the statement quoted him as telling municipal leaders at a meeting in the northern city of Valladolid.

Zapatero unveiled an EUR 11-billion stimulus package last year, mostly dedicated to public works.

But the Bank of Spain's chief economist last week urged the government to rein in public spending.

Jose Luis Malo de Molina told the Wall Street Journal that the margin for new spending or tax cuts is "nonexistent" unless the government takes new measures to cut the budget deficit in the medium term.

AFP / Expatica

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