Eurozone agrees bailout deal with Spain

European finance ministers have agreed on the term of bailout for Spain’s troubled banks that will see the country receive €30bn (£24bn) by the end of this month.

Spain was also handed a year extension – until 2014 – to reach its deficit reduction targets in exchange for further budget saving.

Speaking to the press conference after the nine-hour meeting in Brussels, the head of Eurogroup Claude Juncker said: “We have reached, as far as Spain is concerned, a political understanding on the draft memorandum on the financial sector conditionality for Spain, and discussed the key parameters of the EFSF financial assistance facility agreement.

“We endorsed the extension of the deadline for the correction of excessive defect for Spain by one year, to 2014. This was based on the positive assessment by the commission on effective action taken, and the significantly worsening economic situation in Spain, and its impact on the budgeting situation. We expect Spain to take all necessary measures to meet the new 2014 deadline.”

The exact amount of the bailout is still not known as the evaluation of individual Spanish banks is yet to be completed. However, the EU has set a maximum of €100bn (£79.2bn) of which €30bn (£24bn) will be available by the end of July.

A final loan agreement will be signed on 20^th July.

Rajeeb Gurung