The EU and IMF bailout for debt-ridden Greece will have a positive effect on Spain as it will lower the cost of its debt and calm the markets, Spanish Finance Minister Elena Salgado said yesterday.

European governments endorsed on Sunday an unprecedented €110-billion-euro bailout to save Greece from bankruptcy and shore up the single currency after Athens agreed to draconian spending cuts.

Investors worry that Greece's debt debacle could spread to other eurozone nations, including Spain.

The Standard & Poor's credit rating agency on Wednesday slapped Spain with a credit downgrade amid fears its recession could further weaken its public finances.

"This aid will help to calm the markets," which determine the interest that countries have to pay, "to confront their deficits," Mr Salgado told Spanish public radio.

"We need to ask for loans, and interest rates for the loans depend on the stability of the eurozone," she said.

Market stability "will certainly help in lowering these interest rates," so the effects on Spain "will not be negative, but rather positive."

Spain's socialist government unveiled a €50 billion austerity plan earlier this year intended to bring the public deficit to within a eurozone limit of three per cent by 2013 from its current level of 11.2 per cent.

But many analysts argue more measures will be needed for this target to be met.