Rajoy to Spain’s banking sector: “be transparent and merge”

MADRID | In his the first interview granted to Spanish media as Prime Minister of the Spanish government and after a number of weeks of silence (which has been heavily criticised by the press), Mariano Rajoy explained to new agency Efe some details of his political and economic project for the country.

Among many aspects, he spoke of the restructuring of the financial sector for which he announced a re-organisation plan, thus moving away from the possibility of creating a ‘bad bank’. Below are excerpts for readers of The Corner of the statements made by president Rajoy regarding his economic priorities for the next three months (our emphasis).

“Deputy president Soraya Saenz de Santamaria said we are “at the beginning of the beginning” as far as economic measures are concerned. What measures can we further expect? She was right […] We took some initial measures practically five days after taking office, very important ones: we are talking about €15 billion in cuts, equivalent to 2.5 trillion of our old ‘peseta’.

“Our priorities during the next three months are numerous. The first: we have to continue reducing the public deficit. This is a priority of primordial importance if we are to get real credit because if not we risk being given none or to end up paying astronomical interest rates… In the State Budget, that we will present before the 31 of March of this year, during the first quarter, we are going to make further budget cuts on public expenditure.

“Also, this month, we are going to meet with the autonomous regions in the fiscal policy council and we will also meet with the local authorities with the purpose of telling them that they all have to tighten their belt just like the Spanish families and businesses have done. We will submit, within one month from today, a bill that will set budgetary stability and an expenditure ceiling for debt that may not be exceeded by neither the State nor the autonomous regions.

“Secondly, in this first quarter, we will also present a very important structural reform of the Spanish labour market with the goal of creating employment.

“Thirdly, before the 15 of February, we will present a plan for the restructuring of the financial sector. A plan that will force the financial entities to re-organise, be transparent and begin a new process of mergers of the financial entities in Spain so that the new ones attain a good size, are solvent and, especially, start giving credit again to small and medium sized businesses as well as to families, something that is fundamental if there is to be a recovery.

“There will not be a ‘bad bank’ in Spain and we will establish a system that will not be burdensome for the taxpayer.

“And also, very quickly and certainly before the end of this period of sessions, that is, during the first half of the year, we will do some things from the fiscal point of view to help the small and medium size businesses, the entrepreneurs –who employ 80% of the people who work in our country– so that things are easier for them.”