Madrid, Mar 4 (IANS/EFE): Foreign investors will regain their confidence in Spain this year, while the country's nationalized banks will start repaying the funds they received, Spanish Economy Minister Luis de Guindos said.

"The future looks much better than it did a year ago," De Guindos told EFE in an interview. "The Spanish economy's foundation is solid."

If the doubts about the euro's survival continue to dissipate and the reforms implemented by the government bear fruit, the risk premium on Spain's bonds - the difference between the interest rate on Spanish 10-year bonds and similar German government instruments - will fall below 300 basis points, De Guindos said.

Spain's economic meltdown started with the bursting of the real estate bubble in the wake of the financial crisis caused by the failure of US investment bank Lehman Brothers in 2008.

The fallout from Lehman's failure battered economies across Europe and caused Spain to plunge into a severe recession that sent the unemployment rate soaring to a record 26 percent.

Spain's economy will contract 0.50 percent in 2013, but the trend this year "is going to be positive", De Guindos said.