France says fears over Spain's finances 'excessive'

PARIS - Agence France-Presse

French Budget minister Valerie Pecresse walks at the end of the weekly cabinet meeting at the Elysee palace in Paris, Wednesday April 22, 2012. AP photo

French Budget Minister Valerie Pecresse said on Wednesday that market fears over Spain's finances were "excessive" and that Madrid was pursuing the proper reforms.

Pecresse, who is also the government spokeswoman, said "we believe the fears being expressed today about Spain's economic health are excessive.
 
"We think (Spanish Prime Minister) Mariano Rajoy's government is carrying out a courageous and necessary structural reform project, which is of a nature to improve Spain's growth potential and lead to a turnaround," she said.
 
"It is clear that the worries being expressed come mainly from the fact that Spain, which was supposed last year to cut its deficit to six percent (of GDP), could not," she said. "This shows, if there were any need, and gives yet more proof of to the French people, the importance of meeting one's commitments on reducing deficits," she said.
 
Financial markets are showing fresh concern about the sustainability of Spain's sovereign debt which is rising fast because of swollen budget deficits.
 
Madrid's 10-year bond yields were close to 5.9 percent Wednesday, having spiked to the key 6.0-percent level in early trade, flirting with rates which many consider unsustainable for the long term as the country struggles to stabilise its public finances and get its economy back on track.
 
Spain has vowed to cut its public deficit -- the shortfall of revenue and spending -- to 5.3 percent of GDP in 2012 and 3.0 percent in 2013 after allowing it to run over target to 8.5 percent last year.