The traditionally effectively management of the Spanish Treasury is one of our best antidotes against the financial crisis. The markets know that Spain has enough liquidity to issue debt at current rates until autumn.
Obviously, nobody is interested in maintaining the status quo because debt interest rates would increase so much that 2013 debt payments would be in jeopardy. At no time since the crisis began has the Treasury not made a debt payment, which signals strength and indicates that external ebbs and flows are not altering annual revenue projections.
This trend, in addition to a schedule that synchronizes each year's debt payment terms with peaks in tax revenues, is what has kept the Spanish debt market open despite increasing economic challenges.
Greece's case warns us that the most complicate task is to re-open closed debt markets. The Treasury's cash holdings, between 40 and 50 billion euros, will allow it to easily handle debt payments due in July and also cover a major 28-billion payment due in October.
From there on, the real challenges could begin if interest rates remain high. For one thing, recent debt issues were placed at high interest rates and the Spanish banking sector owns more than half of it. This is not orthodox. Nor it is good banking practice. Restoring confidence is our top priority right now, and all efforts should be focused on that goal if we want to avoid pushing the Treasury to its limits.
