Spain became the fourth and largest of the 17 countries that agreed to accept emergency assistance as part of the continuing debt crisis. European finance ministers offered an aid package of up to $125 billion. 

Recently ratings agency Fitch hit Spain with a three-notch downgrade of its credit rating that left it two levels above junk status. Then Moody's Investor Services warned it could downgrade Spain and other countries in the eurozone. The International Monetary Fund’s report estimated that Spanish banks need a recapitalization injection of at least €40 billion ($50 billion) following a stress test it performed on the country's financial sector. And US President Barack Obama, facing re-election, enduring a weak economy and in need of strong trading partners, expressed strong concern over the European economic crisis.

Thus, due to the growing pressure from international investors and the Obama administration, Spain has finally agreed to take a bailout package.

The aid offered by countries that use the euro was nearly three times the $46 billion in extra capital the International Monetary Fund said was the minimum that the wobbly Spanish banking sector needed to guard against a deepening of the country’s economic crisis. 


The country is already reeling from deep austerity cuts that have raised taxes, made it easier to hire and fire workers, and cut deep into cherished government programmes including education and national health care.


The bailout package will finally help Spain to regain the economic credibility it has lost by shoring up its banks, which will result in credit being restored so businesses and individuals shut off from loans can start borrowing and the economy will grow again.