The International Monetary Fund (IMF) has once again raised concerns about Spain’s economy, advocating drastic reforms to ensure its recovery.
The IMF’s comments came after the Bank of Spain had to step in to rescue the Cajasur bank at the weekend.
The IMF suggests the Spanish economy faces serious challenges and believes there is an urgent need to reform what it describes as a ‘dysfuncyional’ labour market and its banking sector.
The Spanish deficit – the amount borrowed to fund public services due to insufficient tax returns and other revenues – currently equates to 11% of Spain’s economic output, substantially higher than the eurozone ceiling of 3%. Greece, already in trouble, has a deficit of 13.6%.
Also of concern to the IMF is Spain’s property market slump, heavy private sector indebtedness, weak productivity and general competitiveness.