The European Central Bank "knows perfectly what the problems of the euro are and will act accordingly". Spanish Finance Minister Luis de Guindos is certain of this, continuing along the lines of Prime Minister Mariano Rajoy, declaring that everything will depend on what ECB President Mario Draghi promises on Thursday 6 September. That is, from the volumes of government bonds that the ECB will undertake to purchase to moderate speculation on the sovereign bonds of Spain and Italy. Rajoy was clear yesterday in an interview with Corriere della Sera: “If the ECB's methods of intervention are positive for Europe as a whole, I will request them, otherwise not”.
Thursday so it will be there decisive day for Madrid: and Draghi will pronounce the fateful spread-saving measures, in the Spanish capital Mariano Rajoy e German Chancellor Angela Merkel will discuss how to solve the country's problems, and meanwhile the Treasury will place on the market passes expiring in April 2014, July 2015 and October 2016. It seems the ideal situation to define the request for aid: if Draghi announces the reforms that Madrid likes and Rajoy establishes the conditions for the Memorandum of understanding with Merkel, there is not much room left to doubts about the path that the Spanish Executive could follow.
In recent weeks, Madrid has been showing its determination to do "its homework". De Guindos today reiterated that Spain pledges to meet the target of a deficit/GDP ratio of 6,3% this year, as agreed with the European Union – from 8,6% in 2011. However, the minister acknowledged that the data for the first seven months of 2012 – in July the deficit reached 4,6% of GDP equal to 48,6 billion euros – “they are not good”. But the commitment to respect the target "is the Government's number one priority, he assured. Meanwhile, all the country is talking about is the painful decision to increase VAT from 18% to 21%: a measure that cost the prime minister dearly in terms of popularity, but which was appreciated by European leaders.
In addition to the aid that Spain could ask for from the state-saving fund, there are others at stake 100 billion euros that the EU will make available from the end of October to recapitalize the Spanish financial system, severely damaged by the housing bubble. But the banks' problems seem bigger than expected every day: Bankia, the symbolic institution of this crisis, recorded in the first half of 2012 a loss of 4,45 billion euro due to loan adjustments of over 6,5 billion related to the housing market. And for this in the next few hours, De Guindos declared, the Spanish bank rescue fund (Frob) will inject capital into the Bfa/Bankia group, as an advance on Community aid. Sources close to the operation speak of an amount between 4 and 5 billion euros.
