SANTANDER, Spain (Reuters) - Spain should control public spending and ensure transparency while implementing structural reforms in pensions, labour, health and education, the head of Spain’s second-largest bank BBVA said on Monday.
“Spain’s priority is to restore confidence to the markets,” BBVA chairman Francisco Gonzalez said at a business leaders conference.
“Spain has three urgent tasks, one of which is to ensure its public finances are sustainable in the medium-long term by guaranteeing transparency and controlling public spending and debt,” he said.
The second task is to implement structural reforms in key sectors to stimulate economic growth, while the third priority is a restructuring of Spain’s financial system, he said.
“We need a solvent and stable financial system, a substantial reduction in the installed capacity in the sector and a sufficient injection of funds,” Gonzalez said.
Spain’s financial sector is currently undergoing a wide-ranging consolidation which is expected to be completed by mid-year.
Gonzalez said the sector is facing a “difficult and uncertain future.”
Asked about the widening of the spread between Spanish bonds and the benchmark German bund in recent weeks, Gonzalez said the problems for Spain’s sovereign debt were affecting the borrowing abilities of the country’s companies and financial firms.
“If the Spanish state has difficulty in financing itself outside Spain, then the difficulties will be even greater for those in the private sector. For the majority of companies and Spanish financial firms, international capital markets are closed,” he said.
Reporting by Carlos Ruano and Nigel Davies; writing by Judy MacInnes, Editing by Sonya Hepinstall/Jason Webb