FRANKFURT (MNI) – European Central Bank Vice President Vitor
Constancio said Tuesday that financial markets may have overreacted on
Spain, and he predicted that the fiscal targets Madrid has agreed to for
this year and next will be met.
“We know that all the clarifications and decisions that have been
taken by the government will change the market perceptions,” Constancio
told journalists after speaking at a statistics conference here hosted
by the ECB. “We trust that the commitments that have been approved will
be fulfilled.”
Constancio stressed that Spain’s deficit targets for both 2012 and
2013 would be met, reminding listeners of the Spanish commitment to
bring its deficit down to the EU limit of 3% of GDP by next year, from
8.5% at the end of 2011.
“There is the commitment to get to 3% next year,” Constancio said.
“There is no further issue on that.”
The Spanish government, headed by Prime Minister Mariano Rajoy,
sent shivers through bond markets last month when it unilaterally
decided to raise its deficit target for 2012, originally slated at 4.4%.
The 8.5% deficit ratio at end-2011 was already far wide of last year’s
6% target.
Rajoy said he wanted a new 2012 target of 5.8%, but under pressure
from the European Commission he eventually agreed to a 5.3% target. He
also committed to sticking with the previous promise of reaching 3% by
next year.
Spain’s deficit target travails, exacerbated by a grinding
recession and unemployment near 24%, have spooked markets and sent
Spanish bond yields sharply higher in recent weeks.
Constancio refused to comment on the idea of reviving the ECB’s
bond-buying program, which has remained dormant for five straight weeks.
He also gave no comment when pressed about a possible third longer-term
refinancing operation.
–Frankfurt bureau: +49 69 720 142; email: twailoo@marketnews.com
[TOPICS: MT$$$$,M$$CR$,M$X$$$,M$$EC$,MGX$$$]
