Spain's PM Mariano Rajoy pledges to battle on

Angela Merkel (R) and Mariano Rajoy address a press conference at the Chancellery in Berlin on 4 February 2013 Mrs Merkel said Germany would support Mr Rajoy's efforts to steer Spain through the crisis

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Spanish PM Mariano Rajoy has fiercely denied corruption allegations, pledging that Spain will see off its worst financial crisis in recent years.

He said his Popular Party (PP) was committed to reforms that would steer Spain away from the financial crisis.

Mr Rajoy rejected opposition calls for his resignation after a newspaper published images of documents allegedly showing secret payments to PP members.

He said the claims were "totally false" and denied receiving illegal money.

Speaking alongside German Chancellor Angela Merkel in Berlin, Mr Rajoy said his government remained strong and would overcome the accusations, which have sparked protests and an online petition for his resignation signed by 850,000 people.

"The government is stable. The PP has a majority," Mr Rajoy said. "It's carrying out its agenda based on reforms."

Mrs Merkel said Germany would support the Spanish government's efforts.

Rajoy scandal - the key questions

  • What are the allegations? That documents published by El Pais are a list of undeclared or secret cash payments to senior PP members
  • Is Spain's prime minister involved? Mariano Rajoy's name is written a number of times in the documents.
  • How damaging could this case be? The scandal has already damaged the image of Mr Rajoy and his party because it has received such widespread media coverage.
  • What happens next? Spain's chief state prosecutor says there could be enough evidence to investigate. Mr Rajoy says he will publish his earnings online. Opposition leaders have called for him to resign, but as things stand, that looks unlikely.

"I have the impression that the whole Spanish government is working to drive down unemployment, to push through structural reforms," she said.

The International Monetary Fund also gave Mr Rajoy's government a vote of confidence - saying on Monday that Spain's financial and banking reforms were at an "advanced stage".

But Spain's benchmark Ibex share index dropped 2.86% late on Monday amid worries about the corruption scandal and its potential implications.

However, there was some speculation in Spanish media that Mr Rajoy, in one of his answers at the press conference, appeared to have admitted that some of what the El Pais newspaper published was correct.

Asked about the payments, he said: "Everything that refers to me, and that appears there, and to some of my fellow party members that appear there, is not right, except for something that the media has published."

Resignation unlikely

The central claim is that documents published by El Pais are a list of undeclared or secret cash payments linked to senior PP members.

Analysis

Unsurprisingly, this was one of the toughest press conferences Mariano Rajoy has faced since becoming prime minister.

When he made his public statement at his party's headquarters in Madrid on Saturday, there were no questions from journalists, who had to follow via video-link from a separate room.

Everyone knew that at a press conference, following a bilateral meeting with Angel Merkel, questions were par for the course.

The fact that German journalists directed questions to Mr Rajoy on the subject shows that the scandal has taken on international significance. There is no sign that he might step down but, rightly or wrongly, his credibility is being questioned.

Mr Rajoy gave calm and measured replies, once again calling the allegations against him and his party false. The PP are now on the offensive, threatening legal action against those responsible for what they claim are cooked-up allegations.

But the fallout from the documents published by El Pais is still firmly on the domestic news agenda, dominating the headlines in Spain.

Until 2007, Spanish political parties were allowed to receive anonymous donations.

El Pais is adamant that the ledgers, dating from 1990 to 2008, were written by the party's former treasurer, Luis Barcenas who stepped down after being implicated in a separate, high-profile corruption case.

Mariano Rajoy's name is written a number of times in the documents. Alongside his name are numbers totalling 25,200 euros for each year, from 1999 to 2008.

On Saturday, two days after the documents were published, the prime minister publicly denied ever having received any secret payments.

He said the allegations against him and his party were false.

Spain's chief prosecutor has said there could be enough evidence to investigate the allegations. but the PP has said it will take legal action against those responsible for what it says is a smear campaign, while announcing an internal audit of its finances.

The leader of Spain's main opposition party, Alfredo Perez Rubalcaba, has called for the prime minister to resign, but the BBC's Tom Burridge in Madrid says that as things stand, that looks unlikely. The prime minister has said he will publish his earnings online.

Spaniards have been asked to accept painful austerity measures as the government battles to avoid an international bailout. Meanwhile, the unemployment rate has reached a record 26%.

Small crowds of demonstrators took to the streets in Madrid, Barcelona and Seville on Saturday evening calling on Mr Rajoy to step down, with clashes with police in the capital.

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