MADRID, July 16, 2008 (AFP) - Spanish Economy Minister Pedro Solbes Wednesday defended the government's decision not to help troubled property group Martinsa-Fadesa, insisting it was up to the private sector to solve its own problems.

'I am not particularly in favour of the public sector resolving the problems of the private sector,' he told Punto Radio.

'It is difficult to justify because it means using citizens' taxes... The risk must be supported by the shareholders.'

Martinsa-Fadesa filed for bankruptcy on Tuesday, becoming the first major casualty of Spain's once-booming housing market crisis.

The news shook the Madrid stock market, which fears other property and construction companies could also fail.

But Solbes said people should not 'conclude that other companies will be affected in the same way. Each company has its characteristics.'

Martinsa-Fadesa, a leading property group in Spain, said that despite many attempts it had been unable to obtain a loan of 150 million euros (239 million dollars) needed as the basis for refinancing.

On Friday, the group had requested an extra delay to raise the loan as part of a plan to refinance debt of 4.0 billion euros.

Its creditors said they had already put aside more than 600 million euros against their exposure to Martinsa.

The low interest rates that followed Spain's accession to the eurozone in 1999 fuelled the housing boom as Spaniards took out mortgages to buy homes for the first time or to trade up to a larger house.

The market began to suffer early last year as rising interest rates and the international lending crunch hit Spain's credit-fuelled expansion, making it hard to sell property in a market that many argue is oversupplied.