Spanish PM says financing of debt 'guaranteed'

12th July 2011, Comments 0 comments

Spain's prime minister said on Tuesday said his country's debt financing is "guaranteed" as he lashed out over the handling of the Greek debt crisis.

Prime Minister Jose Luis Rodriguez Zapatero said the financing of Spain's public debt had "every guarantee" as markets sent its risk premium soaring to a euro-era record.

Higher rates demanded by investors raised Spain's borrowing costs but there should be "absolute calm" about the financing of the state, he said.

"The financing plan for our debt has every guarantee," Zapatero told a news conference with European Union president Herman Van Rompuy after discussing Spain's reforms and the market turmoil.

Zapatero blamed market ructions on the opening of a debate about how private investors might be asked to take part in a resolution to the Greek sovereign crisis.

"We have to make clear as soon as possible what the central problem is, which was the moment that a debate was opened about the participation of private debt in a Greek solution," the Spanish leader said.

"The debate was not opened properly and it has not closed," he added.

"I repeat, the debate was not opened properly. I said it at the time. I made my disagreement clear. Because, one, when you make a proposition its reach has to be defined when it affects private investors and their interests; and, two, you have to evaluate the effects of the proposal."

Spain's government had not changed its opinion about the debate, Zapatero said.

"This is not the right path. The right path is not to go through an exploration of formulas for private sector participation. Unless you have one serious, rigorous, foreseeable formula that generates confidence and a sense of responsibility it can produce negative effects. That is my position."

© 2011 AFP

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