The eurozone’s finance ministers agreed in Brussels on the terms of a bailout for Spain’s troubled banking, saying they would provide the first tranche of 30 bln euros by the end of July.
A final loan agreement will be signed on or around July 20, “taking into account national parliamentary procedures, allowing for a first disbursement of €30bn by the end of the month," EuroGroup President Jean-Claude Juncker said at a news conference.
Though no final figures on bailout for Spanish banking was announced, it is expected to be no greater than 100 billion euro, asked by the country’s government. However, independent auditors revealed the results of a check saying Spain's banks would need about 62 billion euros in the worst case scenario.
The EU financial authorities also said Spanish banks could be directly recapitalized from the euro zone rescue fund without state guarantee as a single European banking supervisor would be set up next year.
Ministers also agreed to extend a deadline for Spain to cut its public deficit to the EU 3.0% limit by one year to 2014 in exchange for further budget savings. Earlier the European Commission proposed to ease Madrid's deficit target for this year to 6.3% of economic output, 4.5% for 2013 and 2.8% for 2014. Spain originally meant to cut its budget shortfall to 4.4% this year, but later revised it to 5.3%.
The Spanish government reportedly plans to save up to 10 bln euros this year through rising VAT sales tax and cuts in social security payments, unemployment payments and pensions.