Spain's PM expects "reasonable" terms for any new aid

MADRID Tue Sep 11, 2012 3:18am IST

MADRID (Reuters) - Spanish Prime Minister Mariano Rajoy said on Monday he expected the European Union to set reasonable conditions for Spain if the country sought a bailout, saying he should not be told exactly where to trim public spending and would not cut pensions.

Spain has already received aid of up to 100 billion euros ($127.86 billion) from the euro zone to help it shore up its ailing banks and has made it clear it could seek a sovereign rescue once euro zone partners and the European Central Bank spell out what strings would be attached.

"I am absolutely convinced that everyone will be reasonable but I insist that we haven't taken a decision," Rajoy told Spanish state television in his first TV interview since winning power more than nine months ago.

No decision on a bailout would be taken ahead of the September 14-15 meetings of euro zone and EU finance ministers, he added.

ECB President Mario Draghi on Thursday unveiled details of an unlimited bond-buying programme to ease the rates being paid by Spain and Italy for their sovereign debt.

But he said the bank would only act after a request to the euro zone rescue fund, something that would come with strict conditions.

"I will look at the conditions. I would not like, and I could not accept, being told which were the concrete policies where we had to cut," Rajoy said.

Rajoy has raised income tax and value-added tax and pushed through billions of euros of austerity cuts, including in public services like education and health, but has not cut pensions. Pensions would not be scaled back in the 2013 budget, he promised.

"The first instruction I gave to the finance minister who is drawing up the budget is that the people it shouldn't affect are the pensioners," he said.

Despite reneging on his election campaign promise not to raise taxes, Rajoy ruled out a vote of no confidence, saying his measures were essential for the country to meet its deficit targets. ($1 = 0.7821 euros)

(Reporting by Sarah Morris; Editing by Fiona Ortiz and Andrew Osborn)

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