European Central Bank Chief Praises Spain Economic Effort

Posted October 4th, 2012 at 10:55 am (UTC-5)
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European Central Bank chief Mario Draghi is praising debt-ridden Spain's efforts to control its spending even as investors fear Madrid will be forced into an international bailout.

Draghi offered his assessment of the Spanish austerity program Thursday, just after the central bank's governing council decided to keep its benchmark lending rate at a record-low three-quarters of one percent.

He said it is “really remarkable when you think how many measures have been announced, legislated and implemented in such a short time.” But he noted that “significant challenges remain” for Madrid.

Spanish Prime Minister Mariano Rajoy said this week that a request for an international rescue package is not imminent. European analysts say they believe Spain will eventually become the fourth country in the 17-nation euro currency bloc to seek outside aid. Spain's banking system has already sought a bailout and more than a quarter of its workers are unemployed.

The central bank is the focal point of the latest effort to control the three-year eurozone governmental debt crisis. Draghi said last month the ECB would buy an unlimited amount of governmental bonds from the debt-ridden countries in an effort to cut the high borrowing costs they incur by selling their debt on international financial markets.

Draghi said the central bank's bond-buying plan has alleviated fears that the eurozone would split up.

“Our decisions as regards Outright Monetary Transactions (to buy bonds) have helped to alleviate the tensions over the past few weeks, thereby reducing concerns about the materialization of destructive scenarios.”