PARIS (MNI) – Spain does not need to seek aid from the European
Financial Stability Facility, and enlarging the resources available
through the EFSF is not what European policymakers should be focusing
on, Spain’s Finance Minister Elena Salgado said in a newspaper interview
published Monday.

Rather, Salgado told France’s business daily Les Echos, European
officials should speak in one voice and convince the financial markets
that they will do everything possible to ensure the stability of the
euro.

Asked point blank if Spain will seek financial aid from its
Eurozone partners via the EFSF, Salgado replied: “No. None of our
fundamentals justify it.” She took pains to distance Spain both from
Greece and Ireland, the two EMU countries that have so far requested
aid.

Greece, she noted, had a large public deficit “not due only to the
crisis,” whereas Spain had produced large budget surpluses in the years
immediately before the crisis. In Ireland, the problem is in the
country’s troubled banking sector, Salgado added.

In Spain, 95% of banks passed stress tests administered by the ECB,
while in Ireland only 50% did. And while Ireland’s banks need additional
equity capital equal to 20% of Ireland’s GDP, for Spanish banks the
corresponding number is only 1.1% of Spain’s GDP.

Given Spain’s insistence that it will not seek aid, it makes sense
that it should be arguing against an increase in the size of the EFSF.
Afterall, those who argue for such an increase do so because they fear
Spain may be one of the market’s next victims.

“It is deceiving to think in purely quantitative terms,” Salgado
said. “We must now evolve towards a permanent mechanism. Markets must
know that European institutions and countries will do everything for the
stability of the euro.”

She added: “Injecting additional resources into the fund is not the
issue of the moment. Today, it’s about demonstrating clarity,
determination and coordination. Europe must speak in one voice in this
crisis, rather than mobilizing additional financial resources.”

–Paris newsroom, +331=42-71-55-40; bwolfson@marketnews.com

[TOPICS: M$$FX$,MGX$$$,M$S$$$,M$$CR$,MT$$$$,M$X$$$]