Defense Ministry to pay Eurofighter 309 million euros, but debt remains

Government sources say Spain will pay Eurofighter 309 million euros over the next few weeks, despite the country's harsh belt-tightening. The payment will reduce Spain's debt with the fighter plane manufacturer to some 400 million euros, which will be paid next year.

The Defense Ministry has been struggling to finance a 31.6-billion-euro modernization program, and Eurofighter, which has been contracted for the manufacture of 87 fighter planes, represents the program's highest expense, at a cost of some 12 billion euros.

Louis Gallois, director of the European aeronautical company, EADS, has estimated Defense's current debt at 600 million euros, a figure he says could grow to one billion euros by the end of the year due to late payment charges, which rapidly increase the debt. Spain's largest outstanding payment was with Eurofighter - some 200 million euros last year.

Defense has tried to manage its financial woes by renegotiating its repayment schedule from 25 to 30 years. It has also canceled some of its orders; an original order of 45 NH-90 transport helicopters has now been reduced to 35.