Spain Must Ask for Help: EU's Olli Rehn

Following the announcement of the European Central Banks new bond-buying program last week, a European official told Spain that if it wants help, all it has to do is ask.
"It's a very clear framework so there has to be a request by member state first, and then the euro group or euro area member states together with the commission and the ECB - and, apparently, the IMF - will define the more specific conditionality," European Monetary Affairs Commissioner Olli Rehn said in an exclusive television interview with CNBC at the Ambrosetti Forum in Italy over the weekend.

Asking for help and having conditions imposed upon Spain is very sensitive for Mariano Rajoy's government in Madrid, which has until now officially denied that it will be forced to ask for a bailout by the EU, IMF and ECB.
Negotiations over the conditions that will be imposed upon Spain are expected to take center stage when European finance ministers and policy makers meet in Cyprus this week.
Rehn believes Rajoy's government has already done enough to be seen as complying with conditions that would be imposed if Spain asks for help.
"In the case of Spain, there is a very clear path of fiscal adjustment that has been recommended," Rehn said. "And there is already a policy agenda for structural reform so that is a part of this recommendation."

"Conditionality would be certainly based on the existing current policies and recommendations," Rehn said. "But any memorandum, which would have to be signed between a country concerned and the euro area, would include very specific targets within the framework of those existing recommendations."
That key message was backed by Christine Lagarde, the managing director of the IMF who said this weekend at the APEC meeting in Vladivostok that Spain and Italy had already taken strong measures that were "adequate in and of themselves."
"It's a country's decision, in relationship with its member state partners and the institutions of the euro zone, to decide what is best for itself and for the group to which it belongs," Lagarde told the Reuters news agency at the APEC meeting.
So Spain is not under any pressure to cut or implement reforms over and above what is already has but must still make a formal request for support, and then stick to the reform program it has already put in place. Those are the terms and now all that's left is to wait and see if Mariano Rajoy will accept them.

Source: Yahoo Finance