The president of the European Commission has said he is confident that a planned bailout of the Greek economy will stop the debt crisis from spreading over to other countries.

Jose Manuel Barroso said on Friday that “rapid progress” was being made towards the multi-billion dollar joint European Union-International Monetary Fund (IMF) package being implemented.

“We believe that these solutions will be conducive to our actions and will prevent further possible effects of the contagion,” he said on Friday during a visit to Beijing in China.

His comments came as Spain’s economy minister reassured her country that it would not need a bailout, two days after its credit rating was cut from AA-plus to AA.

“Our debt is clean, we will not have to ask for help,” Elena Salgado said in an interview with newspaper Cinco Dias, adding she believed the downgrade was unjustified.

“Frankly, I think the concrete facts do not support this decision,” she said.

Domino effect

Salgado said her country was sticking to its targets to reduce its deficit, which ran at 11.2 per cent last year, to three per cent by 2013, and that wide-ranging cuts to government administration would be announced.

But unemployment figures released on Friday showed the severity of the situation in Spain, with the jobless rate passing 20 per cent for the first time in 13 years.

The National Statistics Institute said the rate rose 1.22 percentage points in the first quarter to 20.05 percent.

Fears arose on Thursday that the Greek debt crisis would spark a domino effect in Europe, with a number of debt-laden nations pinpointed at risk.

On Wednesday, credit rating agency Standard & Poor’s cut its ratings on Spain by one notch to AA from AA-plus, saying a longer-than-expected period of low growth could undermine efforts to cut the budget deficit.

A day earlier, S&P had cut Greece’s credit rating to junk bond status and slashed its ratings on Portugal.

Officials from the IMF, EU and European Central Bank are meeting in Athens, the Greek capital, to negotiate the Greek bailout.

They hope to wrap up a deal within days to avoid a debt default that could also threaten countries such as Portugal and Spain.

Greece’s ‘red line’

George Papandreou, the Greek prime minister, said on Friday that his country’s survival was the “red line” he would not cross during the crisis talks.

“Today what is most important is the survival of the nation, that is our red line,” he told politicians at parliament.

“The measures which we must take, economic measures, are necessary for the protection of our country, for our survival, for our future so that we can stand firmly on our feet,” he said.

A government source told the AFP news agency that the joint EU-IMF bailout agreement would be announced by Sunday.

Last week Greece asked the EU and IMF to activate a three-year rescue package worth $60bn this year alone as it faces a May 19 deadline to repay 9bn euros ($12bn) in maturing debts.

Barnaby Phillips, Al Jazeera’s correspondent in Athens, said there is hope that a rescue deal can be announced in the next few days.

“Some sources are saying that Greece may get as much as 120bn euros spread over the next three years.

“But the Greek people are realising that they will pay a heavy price for such a rescue. One newspaper this morning said: ‘A nightmare that’s unavoidable’.”

He said the “bleak series” of spending cuts will include tax rises, big pay cuts in the public sectors and the potential for pay cuts and job losses in the private sector.

But many Greek citizens are up in arms over the proposed cutbacks, sparking dramatic protests on Thursday.

Our correspondent said there were fears that as “austerity measures really bite and as the recession continues, the anger on the streets could grow with severe political consequences”.aljazeera

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