Spain to borrow $267 billion amid pressure

MADRID: Spain plans to borrow €207.2 billion ($266.5 billion ) next year, the budget ministry said on Saturday, as pressure builds for prime minister Mariano Rajoy to tap the European rescue fund instead of financial markets.

Spain’s debt will widen to 90.5% of gross domestic product in 2013 as the state absorbs the cost of bailing out its banks, the power system and euro-region partners Greece, Ireland and Portugal. This year’s budget deficit will be 7.4% of economic output, budget minister Cristobal Montoro said at a press conference. Spain’s 6.3% target will be met because it can exclude the cost of the bank rescue, he said.

Spain’s borrowing plans may test investors’ willingness to continue financing the government with the ECB waiting to buy the country’s debt should Rajoy agree to conditions. The government this past week unveiled 43 measures designed to boost economic growth that economic and monetary affairs commissioner Olli Rehn said go beyond the European Union’s recommendation for Spain’s restructuring.

The budget “seemed to be an indication that Spain would be asking for some official financing soon,” Megan Greene, director of European economics at Roubini Global Economics, said in a Bloomberg radio interview on September 28.

Spain intends to cover 41% of its new financing needs by selling treasury bills and 51% from bonds.

In Pain

Spain’s debt will widen to 90.5% of GDP in 2013 as the state absorbs the cost of bailing out its banks Spain’s borrowing plans may test investors’ willingness to continue financing the government.