SPAIN has pushed through austerity measures, launched labour reforms and taken other measures over the past six weeks in an effort to reassure financial markets about its long-term solvency.

But while the steps have helped preserve Spain's access to the debt market, they have not brought down risk premiums as much as officials hoped.
Spain could, however, seek emergency loans from the 750 billion euro financial safety net which the European Union announced in early May for indebted euro zone states.

The safety net could take care of Spain's funding needs for its three-year lifetime.
Economists have estimated Madrid will need some 350 billion euros in financing through 2012, based on its bond maturities and expected budget deficits.

But Madrid is very unlikely to take this step as it remains able to borrow much more cheaply than the rates it would face on emergency loans.
It sold three-year bonds at an average yield of 3.317 percent last week, far below the rate of roughly 5 percent which it would pay to obtain the loans now.

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