Spain will seek financial help from its Eurozone partners but exactly how much won’t be known until private audits are undertaken, the country’s economy minister announced Saturday.
Earlier, European finance ministers discussed plans to offer Spain up to $125 billion (100 billion euros) in a bid to stabilize its banks – and ease concerns over the even bigger European debt crisis. That amount was described as an upper limit, not an indication of what Spain would ask for.
After Spain’s announcement, the Eurozone ministers issued a statement that they expected a formal request “shortly” and are “willing to respond favorably.”
Spain earlier said it wanted to wait for two independent audits — due by June 21 — before deciding on whether to seek aid, and it was not clear if those audits were being stepped up.
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Spain had resisted asking for a bailout since previous ones for Greece, Ireland and Portugal came with demands for tax increases and spending cuts.
Economy Minister Luis de Guindos emphasized the aid would not come with “micro-economic conditions”.
U.S. Treasury Secretary Tim Geithner issued a statement praising the “concrete steps on the path to financial union” for the Eurozone.
Investors and politicians have been increasingly concerned that Spain might not be able to find the money to prop its ailing banks by itself.
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A report from the International Monetary Fund estimated Spanish banks need a recapitalization injection of at least $50 billion following a stress test it performed on the country’s financial sector. That report came out early Saturday, three days ahead of schedule, underscoring the urgency of the situation.
Officials said there had been a heated debate over the IMF’s role in Spain’s bank rescue, which Madrid wanted kept to a minimum. It will not provide any of the money.
In the end it was agreed that the IMF would help monitor reforms in Spain’s banking sector, while EU institutions would ensure Spain stuck to its broader economic commitments.
Eurozone policymakers were eager to shore up Spain’s position before June 17 elections that could push Greece closer to a Eurozone exit and unleash a wave of contagion.