Spain Econ Min: Further Reform Path to be Announced in Days

--Obviously Have Market Pressures to Continue Reforms --No Margin

on Fiscal Policy, Only Option to Cut Deficit By Heather Scott

WASHINGTON (MNI) - The government in Madrid will within days

announce further steps in its economic and fiscal consolidation

plan, Spain Economy Minister Luis de Guindos said Saturday.

Speaking at the conclusion of the International Monetary Fund's

Spring meeting -- which included approval for a $430 billion

increase in the global firewall -- de Guindos stressed that Spain

has very little fiscal margin and the "only option" is to cut its

deficit. Asked at a briefing to provide specifics on the next

steps in the reform plan, de Guindos promised the will be

announce "in days." He said the before the end of the month the

government has to unveil "the Spanish stability plan, in which

there is a medium-term proposal of the fiscal strategy. "It's a

document in which we commit ourselves to budgetary stability, and

where we indicate the economic reforms that have some budget

impact or impact on Spanish growth," he said. In addition the

government also has to submit its reform plan. Asked about

repeated statements from the IMF and the G20 about the need for

caution in fiscal policies to avoid removing stimulus too soon,

de Guindos explained that the debate is over timing and the

different circumstances in different countries. And, he said,

"there are effects that are not captured by macroeconomic models,

that are intangible, that are very important from the point of

view of economic performance," including the confidence boost

that comes as the result of a reduction in public deficit and is

reflected in the risk premium." Spain also has an advantage over

other countries in Europe because it has "a government with

enormous political stability ... and with a mandate" which

provides a guarantee of continuity to economic policies. He noted

that in the Netherlands, where government fell, or France is

facing presidential elections Sunday. De Guindos repeated that

Spain will take all legal measures to fight back against

Argentina's expropriation of oil company YPF, in which Spain's

Repsol had a majority stake. He said Spain brought up the issue

in the G20 and the IMF, and noted that the communiques Friday and

Saturday including the line: "fostering and protecting investment

is crucial for the global recovery. We reaffirm our collective

responsibility to avoid protectionism in all its forms."

Argentina's action is contrary to the need for international

cooperation in the midst of the economic crisis, he said. The

minister did not meet with his Argentine counterpart, Hernan

Lorenzino. ** MNI Washington Bureau: 202-371-2121 **