Spain, says China to help the patient of savings banks (AP)

MADRID - China is studying a plan to inject euro9.3 billion ($13.5 billion) to help the restructuring of the economies of the bank sector Spain, a Spanish Government official said Wednesday.

The official said Xie Ping, m.p., President of the State-run China Investment Corporation discussed the plan in a meeting with Spanish Prime Minister Jose Luis Rodriguez Zapatero and Chinese investors in Beijing.

The plan provides the corporation contributing euro6 billion and Chinese investors providing the rest. There is no detail to what China could obtain in exchange for the agreement.

Restructuring of troubled savings banks the Spain is essential to the efforts of the Spain to emerge from nearly two years of recession.

The Bank of Spain believes that sector need recapitalisation euro15 billion Fund. Some analysts predict that they need up to eight times that amount.

The savings banks or cajas were heavily exposed to the real estate sector collapsed in the Spain and have to cope with billions of euros of goods seized.

The official speaking on condition of anonymity the policy of the Government.

Earlier Wednesday, Zapatero said that Spain should meet its deficit targets this year without imposing new austerity measures as has regained the confidence of the markets in the public finances of the country.

Zapatero said the Portugal for a rescue request last week would be the last in Europe's sovereign debt crisis.

He spoke after meeting with Chinese investors at the end of a two-day visit. Excerpts of his remarks took place in the Spanish national television.

Spain cut employee salaries and other expenses and frozen pensions under an austerity plan designed to reduce its swollen deficit and deal with the possibility of the crisis in the eurozone debt contagion.

Its objective of deficit for this year is 6.0% of GDP, declining by about 9% in 2010.

The Monetary Fund International, said the figure of 2011 is on the right, but he expects the reader to reduce the deficit of the Spain to slow that country struggles to recover from the recession and trafficking with a rate of unemployment of 20 percent. The IMF forecast Monday that the deficit will be 5.6 per cent of economic production in 2012, way above the 4.4% provided by the Government.

However, Zapatero has been categorical that the Spain imposed all belt-tightening needed: "there is no forecast on the horizon that we will have to take more measures of austerity." None. ?

He said the Cabinet approve a measure important reform Friday but gave no details. Spanish media quoted officials as saying it would mean to fight against fiscal fraud in out vast underground economy of the Spain. Some estimates say that represents as much as 20% of the production of the country.

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