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Defence Ministry Renegotiates Debt

Source: El Pais - Mon 15th Aug 2011

The Spanish Ministry of Defence needs to agree new credit terms on the 25-billion-euros that it owes for new resources. El Pais reports how the repayment will now be extended by a further five years, to expire in 2030.

The Military now possesses some of the most advanced hardware in the world, including the Eurofighter Typhoon, Leopard tanks and F-100 combat system-equipped air-defence frigates. The problem is that now it can't pay for them.

The total bill for the programs has come to more than 30 billion euros - almost 3% of Spain's. So far, the defence ministry has repaid just five billion of this.

The remaining 25 Billion was originally intended to be paid in annual instalments until 2025, but the Ministry is unable to do this without a vastly increased budget, which is unlikely due to the current economic climate where Spain now has to reduce its deficit to 6% by the end of this year, and to 3% by 2013.

Furthermore, the situation is unlikely to improve. The terms of repayment were agreed so that instalments were lowest during the first few years, a period which coincided with the years where the Country's economy was doing well.

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