Thousands of Spanish demonstrators took to the streets on Tuesday and surrounded the Parliament amid shouts for an end to austerity and belt tightening by Spain’s conservative government.
Political pressure is building on Spanish PM Mario Rajoy to not request a sovereign bailout from the EU with its attached strict austerity conditions. However, Spain is in desperate need of a sovereign bailout to help manage their debt levels.
Prime Minister Mariano Rajoy told The Wall St. Journal that he would need to determine whether the conditions attached to the bailout are reasonable before asking for one.
Meanwhile, regional problems within Spain’s provinces are causing more volatility and uncertainty across the indebted country.
Catalan President Artur Mas has recently called for early elections on November 25th. His request for more autonomy and independence from the country clearly complicates matters for Prime Minister Rajoy who rejected his demand last week for greater control over Catalan’s revenues.
Last month, the Catalan government requested €5.02 billion or $6.5 billion from an emergency fund of $23.3 billion established by PM Rajoy’s government to help Spanish regions to obtain their debt obligations.
The government of Catalonia, which has Barcelona as its capital and is the wealthiest region in Spain, has debts of €42 billion and operates an economy as large as Portugal’s.
Spain’s regions have a combined debt of €145 billion of which €36 billion euro must be refinanced this year.
The province of Andalusia announced on Tuesday that it was preparing to request $6.3 billion from the fund.
Spain’s borrowing costs have declined over the past month following the ECB’s decision to buy short term Spanish bonds in the future.
Today the yield on the 10-year Spanish government bond rose 0.13 percentage point to 5.85%.