The Spanish government is working around the clock to prepare its three biggest structural reforms to present to the EU this Friday. The reforms are Prime Minister Rajoy's roadmap, and he has implored his economic team to work quickly to be able to present an outline of stability reforms for Spain's budget, labor sector and financial sector to the European scheduled for next Monday, January 30.
According to sources close to Rajoy's administration, the urgency arose after European Council president Herman Van Rompuy pressured Rajoy when the two men met in Madrid last Tuesday. Van Rompuy, president of the EU, does not want Rajoy to wait until February 10 to give the green light to reforms.
The EU wants to avoid a new chapter in the debt crisis that infected Spain, taking into account that at the end of 2011 the Spanish national debt ended up two points higher than predicted (around 8% of the annual GDP), IMF and Bank of Spain predictions augur a new deep recession in the Spanish economy and Standard & Poor's has already lowered the nation's credit rating to grade A. Further, the Spanish risk premium dropped again yesterday to close at 349 basis points.
In this sense, even though the Spanish government is pointing out that Spain is passing the main test given that sale of treasury bonds has gone well, Rajoy started a process of deep reform during the Delegated Commission of Economic Affairs that he presided over on Thursday.
