Wednesday, June 22, 2011

I.M.F. Sees Considerable and Substantial Risks in Spain

The IMF said it saw considerable risks associated with Spain's economy and urged the Spanish government to redouble its efforts to implement reforms. "The repair of the economy is incomplete and risks are substantial,"

The IMF made the declarations in a statement after a meeting of representatives of the institution with the local government.

According to the IMF, the Spanish economy is growing again thanks to strong exports. The statement cautioned that "downside risks dominate the outlook for growth" among the factors detrimental to the performance of the Spanish economy were worsening financial conditions and the level of unemployment, which remains high.

The President of the Bank of Spain, Miguel Angel Fernandez Ordonez, said the country's banks have taken decisive steps to increase their solvency, but acknowledged that new stress testing may reveal additional capital needs.

"Stress tests being conducted in Europe will show the extent of the institutions of the need for more capital to extreme scenarios," said Ordonez, who is also a board member of the European Central Bank (ECB). But the deficiency of capital in Spain should be small, he said.

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