Kingdom of Spain Economic Policy and 2010 Funding Strategy Secretary of State for the Economy...

Kingdom of Spain

Economic Policy and 2010 Funding Strategy

Secretary of State for the EconomyFebruary 2010

~2009~2

• Highlights

• The long growth cycle and the crisis

• Fiscal consolidation and structural reform

• Funding Strategy of the Kingdom of Spain

3

• Long growth cycle previous to the international crisis • Important challenges ahead: Unemployment and deficit, consequence of the crisis but also symptoms of underlying structural shortcomings• The Spanish Government is determined to act:

• Fiscal consolidation: A cut of 5.7% of GDP in structural primary deficit in 2010-2013

• Structural reforms to boost potential GDP: Sustainable Economy, Bank Reorganisation, Pensions, Labour Market

• Strengths: Sound financial system, low Debt/GDP, institutional ability for reform

Highlights

4

• Highlights




5

1994-2008: Convergence and Debt reduction

Source: Eurostat.

-6%

-4%

-2%

0%

2%

4%

6%

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Spain

Euro-area

30%

40%

50%

60%

70%

80%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Euro-area

Spain

Debt to GDP(% nominal GDP)

Source: Eurostat.

• GDP per capita has leapt forward, exceeding the average of EU-25

• Fiscal rigour during the good times allowed debt to GDP to be more than halved

GDP (Year on year real growth rates)

10

15

20

25

30

Belgium Germany Spain France Italy

2000 2005 2009*

6

Investment binge: housing and beyond

Investment rate vs. Savings rate(% nominal GDP)

Source: Eurostat.* 2009Q3

18

22

26

30

34

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Savings rate Investment rate

Source: Eurostat.

• What has fuelled domestic demand is a soaring investment rate, with the national savings rate staying close to Eurozone average

• The housing boom is part of the story, but not the whole story

Savings rate (% nominal GDP)

6789

1011121314

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Full-time equivalent employees Gross Value Added

7


• The residential real estate sector grabbed a non-sustainable share of GDP and employment…

Source: National Statistics Institute, Spain.

Construction Sector: Gross Value Added and Employment (% Total Value Added and of Total Employment)

8


Investment in equipment (average growth, 1995-2008, %)

0

2

4

6

8

10

Germ

any

Netherlands

Finland

Austria

EU

-15

Denm

ark

UK

Italy

France

Spain

Source: Eurostat

Investment in equipment (average growth, 1995-2008, %)

0

2

4

6

8

10

Germ

any

Netherlands

Finland

Austria

EU

-15

Denm

ark

UK

Italy

France

Spain

0

2

4

6

8

10

Germ

any

Netherlands

Finland

Austria

EU

-15

Denm

ark

UK

Italy

France

Spain

Source: Eurostat

• …but Spain has also invested heavily in equipment, infrastructure and Research and Development

Investment in equipment (average growth, 1995-2008 in percent)

Source: Eurostat.

0.0

1.0

2.0

3.0

4.0

5.0

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

EU-27 GERMANY FRANCE ITALY UK SPAIN

Public Investment(% of GDP)

0%

2%

4%

6%

8%

10%

12%

Bel

gium

Ger

man

y

Spa

in

Fra

nce

Italy

Uni

ted

Kin

gdom

9

Intensive in employment

Source: Eurostat. Labor Force Survey.

Active population (Growth rates from 2005Q1 to 2009Q3)

Labor productivity (Relative to EU-27, PPP)

Source: Eurostat. Labor Force Survey.

• Residential construction attracted low skilled labour, dragging productivity lower

• Labour supply matched this demand with the help of immigration flows

100101102103104105106107

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

95100105110115120125

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Spain Italy Germany France

8090

100110120130140

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Spain Italy Germany France

10

Cost competitiveness

Source: Eurostat.

Unit labour cost index(Relative to eurozone 1999=100)

Source: Eurostat

Manufacturing ULC index(Relative to eurozone 1999=100)

• Loss of competitiveness has been moderate in the tradable sector

• Nominal divergence stems from non-tradables (where the bulk of the adjustment is taking place)

50

75

100

125

150

2000 2001 2002 2003 2004 2005 2006 2007 2008

Spain Germany France United States

60

70

80

90

100

110

120

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Spain Germany France United States

11

Exports show underlying improvement in supply

Share in world merchandise exports(Index 2000=100)

Share in world exports of services* (Index 2000=100)

Source: International Monetary Fund. Source: World Trade Organisation. * Services other than transportation and travel.

• In spite of brisk domestic demand and waning price competitiveness…

• …Spain's market shares have outperformed most of peers

Share of service exports in the OCDE, by service

0

2

4

6

8

10

Tota

l

Tran

spor

tatio

nse

rvic

es

Tour

ism

Com

mun

icati

ons

Arch

itect

ural

,co

nstr

uctio

n,an

d en

gine

erin

g

Insu

ranc

e

Fina

ncia

l

Info

rmati

onse

rvic

es

Roya

lties

and

pate

nts

Oth

erPr

ofes

sion

alse

rvic

es to

Ente

rtai

nmen

t

Gov

ernm

ent

2000

2007

12

Services Exports’ market share has increased significantly

Source: OECD.

• Among others, services related to architecture, construction and engineering have more than doubled market share

13

FDI flows have increased significantly

Source: World Investment Report 2009

• Outward FDI stock per capita has grown faster in Spain than in the Eurozone

• Remains a major destination of international investment

Outward FDI stock per capita relative to Eurozone

0

500000

1000000

1500000

2000000

2500000

Italy

Sw

itzer

land

Chi

na

Can

ada

Bel

gium

Spa

in

Net

herla

nds

Ger

man

y

Hon

g K

ong

UK

Fra

nce

US

Source: World Investment Report 2009

Top receivers of FDI in 2008(Stock in millions of US $)

0.60

0.65

0.70

0.75

0.80

0.85

0.90

2002 2003 2004 2005 2006 2007 2008

4

8

12

16

20

2005 2006 2007 2008 2009

Spain Euro area (16 countries)

14

The crisis prompts an abrupt adjustment

july 2008 sept 2009 dif %

Total 19.382.121 17.935.095 -1.447.026 (100)

Construction 2.361.177 1.752.157 -609.021 (42,1)

Industry 2.731.068 2.377.211 -353.857 (24,5)

Services 13.150.027 12.599.061 -550.966 (38,1)

Sources: Eurostat. Labor Force Survey.

Unemployment rate (In percent)

• Rapid downsizing of residential sector: output, L (mainly in temporary contracts)

• Ripple effects on employment in other sectors

Sectoral employment (total number)

Sources: Eurostat. Labor Force Survey.

1,9

-4,1

-11,4-11,0

-5,0

6,5

-14-12-10-8-6-4-202468

2007 2008 2009

%

Public Sector Balance

Private SectorBalance

15

Changes in sectoral and external balances

Source: National Statistics Institute, Spain.

• Large swing in private sector balance: plummeting Investment and soaring Savings

• Government Deficit jumps, but 2.5 points of GDP are one-off

• Current Account deficit has halved in 2009Sectoral balances

(% of GDP)

16

• Highlights




17

Policy Strategy for Sustainable Growth

• Prudent Macroeconomic Scenario 2010-2013

• Agreement on Fiscal Consolidation to bring the deficit back to 3% in 2013

• Structural Reforms:

• Structural Reforms in the goods markets

• Public Pensions System

• Labour Market

• Banking sector Restructuring

18

The Government’s Macroeconomic scenario

• The output gap will be closed by 2013, after peaking in 2010

• External demand contribution to GDP will gradually wane as domestic demand gathers steam

• Potential growth will recover from a trough of 0.6% in 2010 to 1.6% in 2013

GDP -3.6 -0.3 1.8 2.9 3.1Final Consumption Expenditure -2.4 0.3 1.7 2.2 2.1Gross Fixed Capital Formation -15.7 -6.5 0.3 4.2 5.9

National Demand (contribution to GDP growth) -6.4 -1.4 1.4 2.6 3.0Exports of Goods and Services -12.4 2.8 5.2 6.9 7.4Imports of Goods and Services -18.7 -1.3 3.7 5.8 6.8

External demand (contribution to GDP growth) 2.8 1.1 0.4 0.3 0.1

2011 2012 2013Macroeconomic scenario 2009-2013

Source: Annual update of the Stability Programme.

2009 2010 (Growth rate in percent)

Fiscal consolidation strategy

GDP -3.6 -0.3 1.8 2.9 3.1General Government Budget Balance (% of GDP) -11.4 -9.8 -7.5 -5.3 -3.0General Government Gross Debt (% of GDP) 55.2 65.9 71.9 74.3 74.1

2011 2012 2013


(Growth rate in percent)Fiscal Adjustment Path 2009-2013 2009 2010

19

• Substantial reduction in Spending and moderate increase in Revenues

• Already in 2010 a 2.2% cut in structural deficit

Starting and final points of fiscal consolidation

20

• Temporary measures (changes in tax collection, one off investment funds) account for 2.4% points of GDP in 2009’s total deficit

• Total size of fiscal policy adjustment (structural terms): 5.7% of GDP


Fiscal position 2009 2013General Government Balance (1) -11,4 -3Cyclical component (2) -1,4 0I nterest payments (3) -1,9 -3,1Temporary measures (4) -2,5 0Structural Primary Balance (1)-(2)-(3)-(4) -5,6 0,1

Fiscal restraint measures

21


Revenues ExpendituresVAT 0.7Excise Taxes 0.3400€ Tax Rebate Reform 0.4Savings Tax Reform 0.1SME Corporate Tax Reform -0.1Government Expenditure -0.8Additional cut in 2010 Expenditure -0.5Central Government Austerity Plan 2011-2013 -2.6Regional and local government Spending cuts -0.5

Measures adopted and announced (% of GDP)

2010 Budget

New Measures*

• Restraint in wage outlays for all public administrations through:• 10% replacement rate

• No new temporary hiring

• Strong moderation in wages

• Sizable cuts in investment, transfers and subsidies

• We have done it in the past, which proves our compromise, the quality of our public finances, and the success of our fiscal discipline.

• Shared commitment to fiscal discipline and margin to secure further reductions in the deficit

22

Can we implement this?

-14.0

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

*

20

11

*

20

12

*

20

13

*

* Annual update of the Stability Programme.

Net Lending (+)/Borrowing (-) of General Government

(% nominal GDP, EDP)

0.0

12.5

25.0

37.5

50.0

62.5

75.0

87.5

100.0

112.5

125.0

Spain Ireland France Germany Italy UK USA

23Sources: European Commission, Annual update of the Stability Programme and International Monetary Fund.

Eurozone Average: 84.0%

2000-2010

Debt dynamics

• Even after the impact of strong stabilisation policies, Spain's Debt to GDP is significantly lower that the Eurozone average

55.2

65.9

39.7

30

40

50

60

70

80

90

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FranceGermanySpain

2010F

Gross Debt-to-GDP (%) Gross Debt-to-GDP (%)

1

3

5

7

9

11

13

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

*

2010

*

Spain Germany France Belgium Italy UK

24

Lowest interest burden within affordable limits

Ratio of interests to GDP of General Government

(% nominal GDP, EDP)

Source: European Commission.* European Economic Forecast Autumn 2009, European Commission.

25

Structural Reforms in product markets

• Improving the institutional environment for business: by modernizing and simplifying government activities as well as increasing general government discipline

• Fostering competitiveness: by reducing the administrative burden of creating companies and reducing red tape

• Fostering modernization: promoting sectors that are at the base of economic activity (R&D, innovation and training), improving support for their integration into the overall value chain, and facilitating the internationalization of businesses

Estimated impact on GDP ⇨ + 0.32% in Potential GDP

26

Residential Real Estate Sector

• Phasing out fiscal incentives for housing ownership from 2011 (deduction of mortgage payments)

• Removing barriers to the development of the rental market:

• Same fiscal treatment than ownership

• Creation of REITS

• Legal changes to strengthen certainty for landlords

• Tax Incentives for refurbishment provide some support

27

Preventive financial support measures

Capital enhancement

and reorganisation

Credit stimulusLiquidity enhancement

The financial system remains resilient

• Main source of perceived vulnerability regards losses stemming from lending to real estate developers

• Bank of Spain stress test: Operating income over 3 years is able to absorb losses of 40% of the portfolio of lending to real estate developers.

• Extreme assumptions of stress test: PD of 40%(3 times the peak of 1993) and LGD of 100 % (highly implausible)

28

FROB: a tool for restructuring the banking sector

Rationale for the initiative

- Overcoming fragmentation in the savings and banks sector.

- Achievement of economies of scale to digest low interest margins and real estate impact.

Governance

- Independent management.

- Strong accountability to Parliament.

- Authorized by DG Competition.

Asset Operations

- Support to integration processes subject to conditions set by the banking supervisor.

- Instrumented through convertible preference shares with market-oriented remuneration.

Funding

- Public-private mix of capital (9 bn€).

- Agency-like funding programme coordinated with the sovereign programme.

29

Pension System Reform

Proposed Measures:

• A progressive increase in the retirement age (to 67 years)

• Strengthening relationship between contributions and benefits

• A more flexible relationship between complementary social security and the public system

• Possible adjustment of other parameters of the current system

Expected Results: Sustainability of the pension system

30

Labour Market Reform

• Five main guidelines:

• Stability in employment, by reducing market segmentation

• Reform of Collective Bargaining system

• Incentives for young workers’ employment and education

• Promotion of the integration of women in the labour market

• Worker intermediation and greater control of temporary occupational disability claims

31

32

• Highlights




33

• Significant reduction in net funding requirements and persistence of sound risk metrics• Liquidity, transparency and predictability will continue as guiding principles for the execution of our auction program• As for syndications, timing is dictated by the limit size of the line to be replaced (16.5 bn for longer tenors) and market conditions. • Innovations for 2010: 18-month T-bills reappear, Euro inflation linker still a project• Maintain our stable and diversified investor base

Highlights of Funding Strategy

34

The funding strategy

Tesoro Funding in 2010(Billion euro)

1: Funding requirement = Net I ssuance 76.82: Redemptions bonds 2010 35.43: Net issuance medium long term 61.64 = 2 + 3 Gross I ssuance Medium-Long Term 97,0

5: Net Increase T-Bills 15.26: Assumption of RTVE debt 1.5

7 = 3 + 5 + 6: Net change outstanding debt 78.38: Forecast Outstanding Central Government Debt at end 2010 553.5Source: General State Budgets Bill 2010

34.4

82.376.8

15.2

61.6

116.7

0

20

40

60

80

100

120

140

Total Net Issuance Letras del Tesoro netissues

Medium & long termnet issues*

2009 2010

(*) Includes foreign currency issues.

35

Funding programme in perspective

• Cut in Net Issuance: lower cash deficit and no exceptional increase in net financial assets

Funding Programme. 2010 vs. 2009(Net issuance in billion Euro)

Source: Dirección General del Tesoro y Política Financiera.

36

Short-term funding

• Net issuance in 2009 in line with initial announcement: 34.4 bn€. Gross issuance breakdown:

• 3-month Letras: 19.7 bn€



• Innovations in 2010:

• Calendar change: 3- and 6-month Letras auction 4th Tuesday

• 18-month T-bills relaunched: auction 3rd Tuesday

37

Medium- and long-term funding

• Gross issuance: 2009 overshooting (ca. 25 bn €) due to higher than expected impact of the crisis

• Auction procedures unchanged: Quarterly calendar + potential off-the-run lines announced Friday prior to the auction

• Limit size per line: increased to 16.5 bn € for longer lines

• Bonos del Estado:

• New 5-year benchmark in March

• Current 3-year benchmark B 2.30% 04/2013 issued until 15 bn €

• Obligaciones del Estado:

• New 10 year O 4.00% 04/2020 (5 bn €) successfully syndicated in January

• Next syndication a 15 year line, to replace the matured O 4.80% Jan-2024), expected for February depending on market conditions

38

Diversification of funding sources

• Recent foreign currency issuance:

• Eurobond 2.75% March 2012 ($ 1.0 billion)

• Eurobond 2.00% October 2012 ($ 2.5 billion)

• Tesoro Público is open to additional foreign currency issuance

• Floating Rate Note 3-Month EURIBOR-10 bps, October 2012 (€ 3.0 billion). Possible retapping in 2010

• Projects:

• European inflation-linked issues (HICP-ex tobacco)

• Schuldschein loans

229

319 312

0

100

200

300

400

500

60019

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

(f)

Foreign Currency Other Letras Bonos y Obligaciones

307

358

475

554

39

Main features of Treasury funding strategy

Spanish debt portfolio

(€ billion)


-75

-50

-25

0

25

50

75

100

125

150

Sep

-07

Oct

-07

Nov

-07

Dec

-07

Jan-

08

Feb

-08

Mar

-08

Apr

-08

May

-08

Jun-

08

Jul-0

8

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb

-09

Mar

-09

Apr

-09

May

-09

Jun-

09

Jul-0

9

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb

-10

Germany Italy France Belgium Netherlands40

Recent widening might be an opportunity

Spread of the Spanish 10-year bond vs. main European peers (in bps)

Source: Bloomberg.

41

Cheapening concentrated in the front end

Source: Bloomberg.

Spread of the Spanish 5-year bond vs. main European peers (in bps)

-75

-50

-25

0

25

50

75

100

125

150

Sep

-07

Oct

-07

Nov

-07

Dec

-07

Jan-

08

Feb

-08

Mar

-08

Apr

-08

May

-08

Jun-

08

Jul-0

8

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb

-09

Mar

-09

Apr

-09

May

-09

Jun-

09Ju

l-09

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb

-10

Germany Italy France Belgium Netherlands

An atractive market to invest in

42

43

Increase in market liquidity


0

2

4

6

8

10

12

14

16

18

20

Jul-

10

Ap

r-1

1

Jul-

11

Oct

-11

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Jan

-14

Jul-

14

Oct

-14

Jan

-15

Jan

-16

Jan

-17

Jul-

17

Jul-

18

Jul-

19

Oct

-19

Ap

r-2

0

Jan

-24

Jan

-29

Jul-

32

Jan

-37

Jul-

40

Jul-

41

4.20%3.90%

4.25%3.80%

3.25% 5.40%

5.35%5.00%

6.15%4.20%

4.75%

4.40%3.15% 5.50%

6.00%

5.75%4.90%

4.10%

4.10%

4.80%

2.75%

4.60%

4.30%3.30%

4.70%

2.30%

4.00%

On-the-run bonds

Average outstanding size: 13.5 bn €Target for average outstanding <10 years: 15 bn €Target for average outstanding >10 years: 15 bn €

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

45.000

50.000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020-2023

2024 2029 2032 2037 2040 2041

(Million Euros)

Low Debt Refinancing Risk…

Source: Dirección General del Tesoro y Política Financiera. 44

Redemption profile of Bonos & Obligaciones

Central Government Debt refinancing risk(in % of the total portfolio)

42

24

7

182220

182121

0

10

20

30

40

50

1 year or less 1 to 3 years 3 to 5 years

(%)

31.12.1995 31.12.1999 31.01.2010

Low Debt Refinancing Risk…


45

46

…Thanks to relatively high duration and average life to maturity…

Duration & Average Life to Maturity of the Portfolio (Letras, Bonos and Obligaciones)

(in years)


4.77

6.78

4.79

4.16

6.69

5.52

0.0

2.0

4.0

6.0

8.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Duration Average life

France 6,24Netherlands 6,88Belgium 5,94Italy 7,07

Average life

47

…while achieving lower Funding Costs


Average Funding Costs(in percent)

3.49

2.27

4.32

3.81

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Average cost of Debt outstanding Average cost at issuance

48

Reliance on foreign funding relatively moderate

0102030405060708090

100G

ree

ce

Be

lgiu

m

Ita

ly

Au

str

ia

Fra

nce

Ire

lan

d

Ne

the

rla

nd

s

Ge

rma

ny

Fin

lan

d

Sp

ain

Un

ite

d

Sta

tes

Arg

en

tin

a

Un

ite

d

Kin

gd

om

External public sector debt in 2009(% of GDP)

Source: OECD.

0

5

10

15

20

25S

lova

kia

Bel

gium

Gre

ece

Italy

Spa

in

Fra

nce

Eur

o ar

ea

Irel

and

Net

herla

nds

Ger

man

y

Aus

tria

Por

tuga

l

Fin

land

49

Banks financing of government debt in line with Eurozone average

Holdings of government debt November 2009(% of bank assets)

Source: Citi.

Spanish Banks’ funding from ECB around Eurozone average

50

0%

2%

4%

6%

8%

10%N

L

GE

IRL IT

ES

P

PO

GR

AU FI

FR

BE

jul-08 oct-09

Recourse to ECB funding (% of total bank assets)

Source: Deutsche Bank.

51

Stable and diversified investor base

Government Bonds by Holder(Term investment, % of total portfolio)


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Spanish off icialinstitutions

Non residents

Households &Non f inanc.

Pension & MutualFunds

InsuranceCompanies

Credit Institutions

43.94%

33.37%

52



Letras del Tesoro by Holder(Term investment, % of total portfolio)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Spanish OfficialInstitutions

Non-Residents

Households & Nonfinanc.

Pension and MutualFunds

Insurance companies

Credit Institutions

35.57%

48.97%

53

Government Bonds by Holder(Term investment, % of total portfolio)



0%

5%

10%

15%

20%

25%

30%

France Japan Germany Italy BENELUX Rest of EU Asia, Aficaand others

America Rest ofEurope

2006 2007 2008 2009

54

Top Primary Dealers in 2009

Bonos y Obligaciones

Barclays

BBVA

Calyon

Santander

Société Générale

Letras

BBVA

Santander

Société Générale

55

Thank you for your attention

Soledad Núñez – Directora General del Tesoro y Política Financiera [email protected]

Gonzalo García Andrés – Subdirector General de Gestión y Financiación de la Deuda Pública ggarcí[email protected]

José Ramón Martí[email protected]

Rosa [email protected]

Leandro [email protected]

Pablo de Ramó[email protected]

Ignacio [email protected]

Rocío Chico [email protected]

For more information please contact:Phone: 34 91 209 95 29/30/31/32 - Fax:34 91 209 97 10

Reuters: TESOROBloomberg: TESO

Internet: www.tesoro.es

José Manuel Campa Fernández– Secretary of State for the Economy

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Annex: the Social Security Reserve Fund

The Social Security Reserve Fund amounted in December 2009 to approximately 5.7% (€

60bn) of GDP.

Social Security Reserve Fund asset holdings

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Annex: Ley de Economía Sostenible & General Agreement on Fiscal Sustainability

Competitiveness

- Society of Information.- Science, R&D.- Internationalisation of SME’s.- Education.- Reduction of administrative burden.

Tax measures

- Rental market: equal treatment with ownership.- Elimination of tax rebates: i.e. relief on mortgage payments, 400€ rebate on income tax.- Corporate Income Tax rebates related to R&D and to the environment.

Environment

- Energy Policy.- CO2 Emission-reduction.- Efficiency of transport and infrastructure.

Fiscal Sustainability

- Spanish regions to formulate quarterly reports to the Fiscal Policy Council.- Correction and surveillance of fiscal deficits.- Debt/GDP ratio to reach limit of 60% by 2013.

Kingdom of Spain Economic Policy and 2010 Funding Strategy Secretary of State for the Economy...

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Transcript of Kingdom of Spain Economic Policy and 2010 Funding Strategy Secretary of State for the Economy...