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Bullish Spain starts repaying EU rescue cash

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Bullish Spain starts repaying EU rescue cash
Photo of people walking: Shutterstock
14:24 CEST+02:00
Spain announced on Friday it will make a confidence-boosting early start to repaying a €41-billion ($56 billion) banking rescue loan from the eurozone.

Spain snatched the rescue line in 2012 to overcome a financial emergency in the banking system, which was flooded with bad loans after the bursting of a decade-long property bubble in 2008.

Prime Minister Mariano Rajoy's government said it could now repay the first €1.3-billion tranche back to Spain's creditors.

"Spain will reimburse €1.3 billion of financial assistance because we can do it and so as to strengthen confidence in the economy," Deputy Prime Minister Soraya Saenz de Santamaria told a news conference after a weekly cabinet meeting.

Spain will also cut its net financing requirement -- the amount of money it has to raise to finance the state's activities — by €10 billion to €55 billion in 2014 as its borrowing costs fall and tax receipts rise during an economic recovery, she said.

Spain emerged in mid-2013 from five years of stop-start recession, showing a gradual recovery in activity since then yet not enough to signficantly dent the nation's 26-percent unemployment rate.

 
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