Spain on negative outlook

Credit ratings agency, Moody’s, have maintained the A3 bond rating for Spain, it said in a statement.

However, the country is under negative outlook due to the challenge of it’s budget constraints, which suggests that further fiscal adjustments will be required this year. This is despite Prime Minister Mariano Rajoy successfully reducing the country’s deficit target.

“The easier targets do not affect the country’s A3 government bond rating with negative outlook because Moody’s had already incorporated a likely deviation from original fiscal targets and a slower pace of fiscal consolidation into its analysis,” the statement said.

“While the revised fiscal target for 2012 is more realistic than the previous one, Moody’s believes that the Spanish government will still need to implement a substantial fiscal adjustment this year,”

The agency also suggested that “profound structural reforms” must be put in place in Spain’s autonomous regions to guarantee the country can meet it’s targets

Last Friday, Bank of Spain figures showed the country’s public debt had increased dramatically to 68.5% of GDP, the highest for 16 years, and 8.5 points over the 60% target agreed with the European Union.

However, a caveat must be added here as various opinions say that Spain’s debt-to-GDP ratio is massively understated because it does not include the debt’s of the autonomous regions, nor government guaranteed bank debts.

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2 thoughts on “Spain on negative outlook

  1. TJW

    Once again Real Estate Marbella are at the fore-front of Spains Economy and property market affairs, thank you for your continued supply of quality information.

    I have to say that the last paragraph of this article is what spurred my previous comment, it is nice to see reporting from a neutral stance.

    Personally I beleive that Spain, as it has done since time began but namely since its joining the EU, is and has always mislead its fellow European States as to its actual fiscal state. Spains media openly admitted that it did not need the money they where receiving from the EU for years after it was agreed, but stated they were happy to accept it anyway. Now banks like Santander submitt what is in essence fraudulent accounts that fail to disclose their toxic dept, making their accounts false. Spain as a government are continuing to do this by failing to admitt, disclose or maybe accept that they’re in a far worse position. I am sure when these facts finally come to light that Spain will protest some level of unfairness, but it is clear they are falsly trying to retain their AAA rating. Spain, obviously to a lesser than extent Greece are very much a burden on other EU state economies.

    For those that have followed Spain’s economy for many years, I refer you to Argentinas last ressession, curiously Spainish banks frantically bought out Argentinanian banks, sound familir, need I mention the word Santander? Lets hope this time produces a very different outcome to the last.

    It sickens me that this level of dishonesty and self preservation is not reflected by our own government, seems we are playing to very different rules than many of our european conterparts.

    Great reporting Real Estate Marbella.

  2. Thanks for the comments TJW. It’s nice to know people are reading what I publish!

    EU officials are not as stupid as we all like to think they are. They have made some interesting, and not too favourable comments about Spain’s public debt and austerity measures. I’m sure they are aware that Spain aren’t playing by the same rules as everyone else.

    😉

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