Spanish officials acknowledged that the country's banks and companies are having difficulty finding credit

Spanish officials acknowledged that the country's banks and companies are having difficulty finding credit, underscoring the pressure Madrid faces to pursue deep structural changes to win back investor confidence.

Investors are particularly concerned that Spain would be unable to supply its banks with more capital, if needed, without emergency aid from the European Union and the International Monetary Fund.


Union members march in Bilbao on Saturday, calling for a general strike in the Basque region over Spain's new labor law.

Spain has been scrambling in recent weeks to convince markets that it can repair both its ballooning deficit and its troubled banking sector. Spain's Socialist government plans on Wednesday to begin pushing through a controversial labor-market overhaul that seeks to address a problem that many economists say is at the heart of Europe's economic malaise: rigid labor markets that dissuade companies from investing.

One big worry has been the increasing difficulty Spanish banks have faced borrowing from other banks in the so-called interbank lending market, an important source of funding that banks rely on for short-term liquidity needs. Spanish banks—including its savings banks, or cajas—have suffered massive losses amid a steep downturn in the country's real-estate market.

Spanish officials have largely been quiet on the issue but on Monday Treasury Secretary Carlos Ocaña, speaking at an economics conference, said tightness of credit for Spain "is a problem."

"Obviously we do need for the markets to loosen," he added.