Op-ed: Pressure on the Spanish government

A recent ECB meeting in Barcelona did not go by the script. Draghi is keeping interest rates flat and there will be no more debt purchasing programs. He recalled the Germany?s advice and said that governments should be more ambitious in their reforms and that they are not necessarily incompatible with growth and that it is better to cut regular spending than to raise taxes. Regarding Spain he said that the country is making important progress but needs further work. For example, it needs to finalized financial sector reforms "quickly and transparently."

The IMF also insisted on this approach yesterday. Luis de Guindos indicated that he is aware of Spain's needs and announced that in the next several days it will be announced what banks will need to split off their toxic real estate assets into a bad bank, but the government will not choose to use this term.

Even when the Ministry of the Economy proposed to Congress a bad bank comparable to the model used by Germany, which allows voluntary participation in the bad bank for firms that have provided all capital previsions required by Spain's financial reform laws. International pressure on Rajoy's government is centered on the need to clean up Spain's financial sector very soon.

The time frame for cleaning up the sector goes no farther than the beginning of the summer. This is as long as Spain can go without being subjected to an intervention, which would hand our decision-making power over to the EU and the ECB. To drive growth it is necessary to regain our confidence and the wise thing to do is to complete reforms, because the time for doing it without protection from outside aid is running up.