IMF still sees risks in Spanish economic situation

Madrid, July 16 (IANS) The International Monetary Fund (IMF) in its third report on the financial reform carried out in Spain noted that there were still risks for the Spanish economy and its banking system.

The IMF explained that after Spain's banks' recapitalization, the Spanish banking system was healthier and had more liquidity, but warned that the system also faced risks because of the world economic crisis, reported Xinhua.

The IMF said growth would be weak if Spain or the European Union (EU) does not take further steps to promote it, while recognizing that most of the measures that Spain should have carried out are already implemented.

It encouraged the EU to make progress in banking union in order to break the link between sovereign debt and the financial sector, a fact that undermined Spain's public budget after the country had to inject several billion euros in its financial system.

The IMF revised down its 2014 growth forecast for Spain from 0.7 percent announced in April to zero percent published in early July. The IMF did not change predictions for 2013, when the economy would fall by 1.6 percent.