Spain's budget fixes backed by IMF

Spain's budget fixes backed by IMFAccording to the reports, International Monetary Fund Managing Director Dominique Strauss-Kahn Friday endorsed Spain's efforts to right its financial difficulties.

The New York Times quoted Strauss-Kahn as saying in Madrid, "The potential for growth in Spain is huge, as has been shown in the past few years. Now you have problems, everyone has problems."

Strauss-Kahn met with Spanish Prime Minister Jose Luis Rodriguez Zapatero to review Spain's budget crisis.

It has further been reported that Spain's government debt soared to 11.2 percent of its gross domestic product last year, up from 4.1 percent. Unemployment in Spain has reached 20 percent, more than twice that of the United States.

Marco Annunziata, chief economist at UniCredit Group, said in a research note that with the fourth-largest economy in the eurozone, "Spain is now the eurozone's linchpin."

The note said, "If Spain fails, the eurozone's wheels will come off, derailing the continent's recovery and its financial system."

It was further reported that credit rating agency Fitch has downgraded Spanish bonds to an AA rating from AAA, but Spain received another vote of confidence this week, selling $4.3 billion in government bonds at an auction on Thursday. (With Inputs from Agencies)