BRUSSELS (MNI) ? Spanish Prime Minister Jorge Luis Zapatero and EU
Commission President Jose Manuel Barroso urged Eurozone governments to
speedily implement measures to fight the spread of the sovereign debt
crisis.
The two spoke over the phone yesterday about Spain?s rising funding
costs and agreed that Eurozone governments must ?put in place as fast as
possible what was agreed at the 21 July summit,? a spokesperson for the
European Commission said Wednesday, adding that an official statement
would be released soon.
Spanish bond spreads have come under pressure as markets fear the
Eurozone?s fourth largest economy could struggle to repay its debts.
Last week the International Monetary Fund praised Spain?s efforts
to improve its public finances and strengthen its banking system but
warned that the country was still ?in the danger zone.? Should Spain
need a bailout, there would be ?significant global ripples,? but France
and Germany would be most directly affected, the IMF said.
On the same day, credit rating agency Moody?s said it was
considering downgrading the country?s sovereign debt rating and Prime
Minister Zapatero called early elections in a bid to ensure the next
government would have the strong public support it would need to
undertake further tough reforms.
Italy, the third-biggest economy to use the euro, has also seen its
sovereign bond spreads widen and has been intensifying discussions with
the European Commission and other Eurozone partners.
Italian Finance Minister Giulio Tremonti spoke to EU Economic and
Financial Affairs Commissioner Olli Rehn on the phone last night about
Italy?s situation and this morning met Jean Claude Junker, Luxembourg?s
prime minister and head of the Eurogroup of Eurozone finance ministers.
Rehn has denied that emergency plans are being prepared to help
Spain and Italy, but EU officials are working to finalise details of the
crisis response measures, which would allow the EU?s emergency bailout
fund, the European Financial Stability Facility, to intervene in bond
markets. Once the plan is finalised, however, it still needs to be
approved by national parliaments.
Cyprus is also causing concern. Heavily exposed to the Greek
economy and hit by an explosion at its most important power plant, the
country?s largest bank on Monday warned that the island could need
financial assistance if new austerity measures were not soon put in
place.
?Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com
[TOPICS: M$X$$$,M$S$$$,M$$EC$,M$I$$$,M$$CR$,MGX$$$]
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