Spain says no comparison with debt-hit Ireland, Portugal

16th November 2010, Comments 0 comments

Finance Minister Elena Salgado said Tuesday there is "no reason" to compare Spain with the debt-struck economies of Ireland and Portugal.

"The situation in Spain is and will continue to be completely different," she told reporters as she entered parliament, adding there is "absolutely no reason" to compare the situation in the two countries with Spain.

"We have adopted (austerity) measures in May and we are applying them."

In a bid to shore up its public finances, the government in May passed a 15-billion-euro (20.5-billion-dollar) austerity package that included an average state employee salary reduction of five percent and a pensions freeze.

That was on top of a 50-billion-euro package of spending cuts announced in January designed to slash the public deficit to the eurozone limit of three percent of gross domestic product by 2013 from 11.1 percent last year.

"Our budget execution figures show that we are on track to meet our deficit goals, the budget for 2011 will be approved and our economy is beginning to recover," said Salgado.

Spain's socialist government has negotiated the support of two small regional parties to secure the passage of its budget for next year, which pledges to reduce state expenditure next year by 7.9 percent to 122 billion euros, excluding financing costs.

By contrast Portugal's minority socialist government is still holding talks with the main centre-right opposition party to secure final passage of its austerity budget for 2011, which passed a first reading on November 3.

Portuguese Foreign Minister Luis Amado warned in an interview published over the weekend in weekly Expresso that Portugal could be forced to leave the euro "if we are not able to ensure confidence in the governability of the country".

The Irish government said Monday it was in contact with international partners over its budget woes while insisting it had not sought a bailout like the one received by Greece earlier this year.

Salgado denied Spanish media reports that Brussels had asked Prime Minister Jose Luis Rodriguez Zapatero to enact further reforms to distance Spain from Ireland and Portugal.

"I don't have that information," she said when asked about the press reports.

Earlier on Tuesday Spain raised 4.975 billion euros at an auction of 12-month and 18-month bonds but had to offer higher interest rates as investors sought greater returns, reflecting renewed concerns over eurozone debt levels.

The treasury had hoped to raise between 4.5 and 5.5 billion euros with the bond issues.

Spain's fledging economic recovery from nearly two years of recession triggered by the collapse of a property bubble came to a stop in the third quarter amid tough austerity measures, official data showed Thursday, hindering efforts to slash the deficit.

Gross domestic product showed zero growth in the three months to September 30 from the previous quarter, the national statistics institute said in a preliminary estimate.

© 2010 AFP

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