LONDON, England (PNN) - March 21, 2012 - Spain has never been so close to default and Greece, Ireland and Portugal may need further bailouts, Citigroup Inc. chief economist Willem Buiter said.

“Spain is the key country about which I’m most worried,” Buiter, a former Bank of England policy maker, said in a radio interview Wednesday on Bloomberg Surveillance with Tom Keene and Ken Prewitt. “It’s really moved to the wrong side of the spectrum and is now at greater risk of sovereign restructuring than ever before.”

Two years of debt-driven stresses in European markets have eased as Greece avoided a disorderly default, the building blocks of a new euro economic management system fell into place and the European Central Bank pumped over $1.3 trillion into the banking system.

“The European Central Bank has drowned the markets and the banks in liquidity,” Buiter said. “There’s a general feeling of near euphoria at the moment which leads those drowning in liquidity to believe that all troubles are over.”

Spain sold 5.04 billion euros of 12-month and 18-month bills at the lowest rates in almost two years Tuesday even as the nation’s overall debt last year surged to the highest in over two decades. Euro-area finance chiefs agreed on March 12 that Spain won’t achieve its budget goal for the second year in 2012 as the country’s second recession since 2009 hampers deficit-cutting efforts.

Buiter said Greece may need another bailout before the end of the year and no later than next year. “The Greek sovereign is by no means on a sustainable path so they will have to restructure again,” he said.

Portugal and Ireland aren’t out of the woods either, Buiter said. Portugal is at a “very high” risk of a restructuring, which may occur next year, and Ireland certainly needs “additional official sector support,” said Buiter.

“The efforts for recapitalization in the case of banks and deleveraging for governments tend to slacken off” when they are no longer confronted with extreme difficulties in funding themselves, added Buiter.