Prime Minister Mariano Rajoy applauded the large European loan for Spain's struggling banks, but claimed the money would not add to the country's deficit.
Europe offered Spain on Saturday up to 100 billion euros ($125 billion) to recapitalize its beleaguered banks, a rescue package designed to stave off an economic collapse in Spain that could drag down the eurozone and the global economy.
The money would come as a cheap loan from the European bailout fund, set up by European governments, and would go to Spain's bank recapitalization fund, disbursed by the Spanish government under advisement from the International Monetary Fund. The exact amount of the loan will not be announced until the end of June, after two bank stress tests and two independent audits are completed.
The rescue should give Spain more time to return to growth. It should also give a reprieve to unsustainable market pressure on peripheral economies, including Italy, with the cost of borrowing for Europe expected to decrease now that doubts about Spain are eased.
“Yesterday the winner was the credibility of the European project, the future of the euro currency, of the Spanish financial system, and of the ability of credit to flow,” said Prime Minister Mariano Rajoy today.