Span­ish PM says coun­try on tar­get to meet goals

Kathimerini English - - Business & Finance -

MADRID (AP) – Spain’s prime min­is­ter said yes­ter­day the coun­try was on tar­get to meet its deficit re­duc­tion com­mit­ments and that it was aim­ing to build on a slight pos­i­tive trend in the la­bor mar­ket into next year. “We will ful­fill the deficit tar­gets,” Jose Luis Ro­driguez Za­p­a­tero told Span­ish Na­tional Ra­dio in an in­ter­view, adding that Spain will not need in­ter­na­tional fi­nan­cial aid, as have Por­tu­gal, Ire­land and Greece. Spain has tasked it­self with slash­ing the deficit from 11.2 per­cent of gross do­mes­tic prod­uct in 2009 to within the Euro­pean Union limit of 3 per­cent by 2013. Its ob­jec­tive this year is 6 per­cent. Za­p­a­tero said fig­ures re­leased this week showed the cen­tral gov­ern­ment was on tar­get but that re­gional gov­ern­ments were lag­ging be­hind and would need to tighten their belts. Ac­cord­ing to the data, the re­gions over­spent 5 bil­lion eu­ros ($7.2 bil­lion) through April. The prime min­is­ter said he was con­fi­dent the econ­omy would grow 1.3 per­cent this year, al­though many an­a­lysts say that is overly op­ti­mistic. Mar­ket sen­ti­ment nev­er­the­less seems to have im­proved some­what. Ear­lier in the day, the trea­sury raised 3.9 bil­lion eu­ros ($5.6 bil­lion) in two bond auc­tions, with strong in­vestor de­mand re­flect­ing an eas­ing of fears over whether the coun­try may need ex­ter­nal help. The trea­sury said it sold 2.75 bil­lion eu­ros in three-year bonds, al­though it had to pay an av­er­age in­ter­est rate of 4 per­cent, up from 3.6 per­cent in the last such auc­tion April 7. It also sold 1.2 bil­lion eu­ros in five-year bonds with the rate drop­ping to 4.2 per­cent from 4.5 per­cent on May 5. De­mand for both sales was 2.5 times that of­fered. The auc­tion co­in­cided with La­bor Min­istry fig­ures show­ing the num­ber of peo­ple fil­ing claims for un­em­ploy­ment ben­e­fits dropped in May by about 80,000, the sec­ond monthly de­cline in a row and a sign the eu­ro­zone’s fourth-largest econ­omy may be en­joy­ing the fruits of eco­nomic re­cov­ery. trans­ac­tion will be closed by the end of June. Europe’s largest phone com­pany owns 30 per­cent in the Greek op­er­a­tor, also known as OTE, con­sol­i­dates it and de­ter­mines its chief ex­ec­u­tive of­fi­cer. Greece’s Fi­nance Min­is­ter Gior­gos Pa­pa­con­stanti­nou last week sent a letter to Deutsche Telekom to ini­ti­ate the “fur­ther pri­va­ti­za­tion” of OTE, of which the gov­ern­ment owns 20 per­cent, to drive for­ward a 50bil­lion-euro as­set sale pro­gram and re­duce the coun­try’s bud­get deficit. HSBC Hold­ings Plc cal­cu­lates the price of the 10 per­cent stake to be about 400 mil­lion eu­ros, or 8 eu­ros a share, ac­cord­ing to a note sent to clients yes­ter­day. (Bloomberg) the prob­lems faced by Greece.” Greece has a 50 per­cent chance of de­fault­ing, Moody’s said on Wed­nes­day, cit­ing the risk it will be un­able to sta­bi­lize its fi­nances and have to re­struc­ture debt. Greece faces a fund­ing gap of about 30 bil­lion eu­ros ($43 bil­lion) next year and is shut out of the cap­i­tal mar­kets with yields on its 10year bonds at more than 16 per­cent. Stan­dard & Poor’s rates Greece B, two lev­els higher than Moody’s, and has said it may cut the grade. Fitch Rat­ings is also re­view­ing its B+ rat­ing, a step higher than S&P, for a pos­si­ble down­grade. (Bloomberg)

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