Spain’s Prime Minister Mariano Rajoy has one foot on the dock and the other on the boat when it comes to a wave of lender-required austerity in an expected Spanish international bailout.
Tuesday, when asked by reporters if a Spanish bailout is coming this weekend, he answered no, as he did when they asked if a bailout was imminent, according to a Voice of America report.
Nevertheless, many analysts say Rajoy is preparing to request the European Central Bank to buy Spanish bonds and push down the nation's high borrowing costs. Analysts say Spain’s interest payments on debt is unsustainable, which is Rajoys’ economic “dock,” and austerity measures required by lender nations are likely to cause strikes and violent protests across the country, which represents the prime minister’s economic “boat.” National insolvency could be what lurks below the boat and dock.
In a related development, ratings agency Moody's Investors Service said Tuesday it would announce its review of Spain's sovereign debt rating this month. The report was due out in September but was delayed; many analysts say Spain's rating may be reduced to junk status.
Under Rajoy, Spaniards have endured nine straight months of ever-tightening austerity measures, however the economy has not improved and unemployment is over 25 percent.
Tuesday, Rajoy met Spain’s top representatives from 17 regional governments over the ongoing financial crisis and looming austerity measures. Many of the regions are buried in debt and must push through government cutbacks to stay solvent.
If Moody finds Spain not to be creditworthy, borrowing costs are likely to jump again, making a bailout by lending nations more likely, along with further austerity measures.