| SPANISH president Mariano Rajoy has refused to carry out the measures recommended by the International Monetary Fund (FMI), which include increasing IVA, reducing public sector salaries and eliminating tax breaks for owning a first home.
Rajoy stressed that despite the pressure from the FMI, these measures were no more than recommendations – as opposed to orders – and that at present Spain's government's priorities lie more in reducing public debt.
The Bank of Spain has already said that increasing taxes and cutting wages – effectively reducing spending power – was in fact counter-productive.
Rajoy added that with the EU bail-out recently approved, banks would soon be in a position to offer finance on credit again and this would boost the economy and therefore job prospects.
However, he stated that as it was the banks which would be getting the money, it was also up to the banks to pay it back, not the taxpayer.
“We need more political, fiscal and bank integration in order to transmit the message to the world that the common currency in the EU is not reversible,” Rajoy added.
“Because if not, it will create uncertainty among investors.”
Among the causes of Spain's current dire financial situation – mostly relating to overspending and debt – Rajoy added that the country's business environment is anything but competitive.
“If we do not sell, we do not produce, and lack of production means lack of employment,” he remarked.