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"Spain is doing what is needed" : German Economy Spokesman

Source: Bloomberg - Wed 11th Apr 2012
'Spain is doing what is needed' : German Economy Spokesman

Spain is doing enough to reduce it's deficit and investors are unreasonable if they expect European governments to put up yet more money to combat the debt crisis, according to a senior lawmaker from the Ferman Government.

The strengthened financial backstop agreed by euro-area finance ministers in March is "big enough by far for the time being," Michael Fuchs, economic-affairs spokesman for Chancellor Merkel's Christian Democratic Union.

"I'm quite sure that both Italy and Spain are doing their homework," he said. "Why should we worry about Spain now? I don't think there's anything that's going to be a difficulty at the moment."

The comments demonstrate the relecutance of Germany to consider further rescue commitments after being the single largest contributor to bailouts for Greece, Ireland and Portugal. Germany's parliament wouldn't back raising the firewall beyond what was agreed in March, he said.

Both Spain and Italy "still need an instrument in place to help them anytime," Fuchs said. "But this instrument is now really big enough. It's a little bit ridiculous that whenever we have a new instrument, somebody comes and says we have to raise the amount of money. I don't think it's really reasonable."

Finance ministers from the 17-member monetary union decided on March 30 to place 500 billion in fresh money alongside 300 billion already committed, creating an 800-billion defence against the debt crisis now in its third year.

European policy makers are counting on the increased backstop to help sway the Group of 20 economies to increase the IMF's anti-crisis funding at a meeting next week.

"They need to come up with something," Fuchs said. "We have done our homework in Germany, so now it's up to them."

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