Spanish Debt ‘Too Big to Restructure’ – IIF

Spain’s sovereign debt load is too big to restructure with the help of private investors, MarketWatch business news wire reported on Thursday citing Institute of International Finance (IIF) Managing Director Charles Dallara.

“[Debt restructuring for Spain] is not desirable, not feasible, and also not necessary. The Spanish economy is much too big for a [private sector involvement],” Dallara said.

The IIF, which represents over 450 of the world’s largest private financial institutions, played a key role in negotiations to restructure the Greek debt.

The IIF head also said the Spanish government should cut its ties with troubled banks, noting only part of the Spanish banking sector is in trouble.

Spain is considered to be one of the most economically unstable eurozone countries which are not getting foreign financial support. Spain’s state debt may grow to 79.8 percent of gross domestic product in 2012, an 11 percentage point increase compared with last year.

The Bank of Spain confirmed in late April that a technical recession had started, while Standard Poor’s rating agency downgraded the country’s long-term sovereign rating to ‘BBB+’.

Spain’s budget deficit amounted to 8.5 percent of GDP in 2011. The European Commission said in late February that it would be difficult for the country to reduce its budget deficit to 4.4 percent of GDP in 2012 and to three percent of GDP in 2013.


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