Reports have surfaced that the EU, the IMF and the US treasury are drawing up an emergency liquidity plan for Spain that includes a credit line of up to €250 billion.
Spanish daily El Economista reported on Wednesday (16 June) that the plan was discussed at a special IMF board directors meeting and was aimed at avoiding some of the harsher components of Greece’s recent bail-out.
“The solution outlined for Spain will benefit from the resources of the bail-out fund of the union and a contribution from the IMF, consisting of a credit line that the fund provides to countries with solvent economies but at risk of contagion,” said the paper.
On top of that, several leading German newspapers have recently suggested that EU and member state officials are quietly preparing to release funds to Madrid from the euro area’s €750 billion rescue mechanism that was agreed last month.
Commission chief Jose Manuel Barroso, together with a string of national politicians, strongly denied this was the case on Monday.
Spain’s economy is currently suffering from a struggling banking sector, an imploded property market, a ballooning budget deficit (currently at around 11.2 percent of GDP) and 20 percent unemployment, rising to 40 percent among young people.
Unions have indicated they will hold a general strike in September as the Socialist government prepares to push ahead with a package of public spending cuts and labour market reforms, designed to contain the deficit and kickstart the economy. Several economists have pointed to Spain’s rigid labour laws as dissuading companies from making investments.