Reuters is reporting that Spain’s new government is considering seeking international aid in order to bolster its financial position.This comes just after the centre-right People’s Party won control of the government earlier this week and on the tail of an announcement that the IMF would launch a big new credit line program allowing countries with good finance to access as much as 1000% of their IMF quota in temporary funding.
With public debt amounting to 63.4% of GDP in 2010, Spain’s fiscal position has been regarded as the least worrisome of the PIIGS since the summer. But rising borrowing costs and government spending increases to bolster the private sector may now be putting that position in jeopardy.
Yields on Spanish bonds topped 6.7% today, still less than the 7.3% Italians are paying right now. Neither of these countries–the eurozone’s third- and fourth-largest economies–have accepted aid yet.
It remains unclear how much thought the Spanish are actually giving to the matter, however.
“I don’t believe the decision (to seek aid) has been made .. but it is one of the options on the table, because I’ve been asked about it. But we need more time and more information on the current state of things,” said the source cited in the report. “If we have to do it, we have to do it now.”
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