* Ordonez rejects govt criticism he is alarmist
* Says social security reform imperative
* Urges bank restructuring
* Says govt backs his bank intervention proposal
(Recasts, adds quotes)
By Andrew Hay
MADRID, April 21 (Reuters) - Bank of Spain Governor Miguel Angel Fernandez Ordonez on Tuesday dismissed government criticism he had caused alarm with his warning Spain's social security could enter deficit and again called for its reform.
Ordonez last week said Spain's social security surplus could run out within a year and called for a pension overhaul and spending controls to limit a swelling public sector deficit.
Spain's Deputy Prime Minister Maria Teresa de la Vega on Monday ruled out a social security deficit and said Ordonez's comments to a congressional commission had caused needless and baseless alarm for more than 8 million Spanish pensioners.
Ordonez said such statements were stoking fears.
"There have been statements made .... that have created alarm," Ordonez told reporters when asked about government criticism. "Pensions are not linked to temporary deficits."
The global economic crisis is rapidly reducing social security surpluses across the world and some pension systems have already entered deficit.
Ordonez said shrinking surpluses should not be seen as an "apocalypse" and Spain, like other countries, had to look at raising retirement ages and other measures to ensure the long-term solvency of its benefit system.
"Its imperative we adopt social security reforms," he said.
Rallying to Ordonez's support, Secretary of State for Social Security Octavio Granados on Monday said a deficit could not be ruled out, even though there was no imminent risk, and the pension system had to be reformed.
He said the system's 58 billion euro ($74.85 billion) reserve fund could be used to cover any deficit that appeared after this year.
"That does not rule out problems for the future, nor the imperative need for reforms to the pensions system," Granados wrote in an article published by El Pais on Tuesday.
GOVT BACKS PROPOSAL
Ordonez defended his stance on social security following a speech to a financial conference in which he underscored the strength of Spain's bank sector, but warned its results would weaken in the medium term as defaults rise.
He urged banks to cut costs, either by reducing their own internal branch network, or seeking synergies through mergers.
Spain launched its first bank bailout of the global crisis in March when the Bank of Spain intervened in savings bank Caja Castilla la Mancha.
The Bank of Spain, government and political parties are in talks on setting up a bank restructuring fund to streamline further possible interventions.
Ordonez has proposed reforms to allow the Bank of Spain to intervene in banks without government permission, as well as measures to cut political influence in savings banks.
Spanish media reports Spain's new Economy Minister Elena Salgado has ignored his proposals.
After their first official meeting, Ordonez said she agreed with his plan to allow bank interventions without cabinet approval.
He said other proposals need to be discussed further.
"These are issues that need a calm and separate debate, and I'm happy with the conversation I had with the new minister," Ordonez told reporters.
(Reporting by Andrew Hay)