At the outset, I would like to thank staff for their candid exchange of views with the authorities, their comprehensive mission and the useful staff Report and Selected Issues paper.
Since last year’s consultations, and thanks to the implementation of decisive policy actions both by the Spanish government and at the European level, the Spanish economic situation has markedly improved. However, important challenges remain ahead, particularly the high unemployment rate, which is the first and foremost concern of the government. The economy will continue in recession in 2013, but recent positive developments are clearly signaling that Spain is in a turning point in the economic cycle. By the end of this year, the growth rate will be positive and it will gradually increase throughout next year. The main task ahead to ensure that these encouraging signs of stabilization are followed by a prompt, strong and durable recovery, capable of reducing in a sustainable manner the significant imbalances accumulated during the boom years and since the beginning of the crisis. The government is fully committed with its policy agenda and is sparing no effort to that end.
In line with IMF’s advice, the government’s economic strategy aims at fostering growth and creating jobs and it is based on three main pillars: a fiscal consolidation effort in order to ensure a sustainable public debt level; a profound financial sector reform directed at restructuring and reinforcing financial institutions; and a comprehensive set of structural reforms to increase flexibility and competitiveness in the economy and lay the foundations for higher and more balanced future growth.
The forceful implementation of this strategy is starting to bear fruit. The main underlying imbalances are correcting rapidly. The fiscal deficit is being reduced and the current account deficit has turned into a surplus, while the net IIP has started a diminishing trend and productivity and competiveness have strongly improved. The banking system is now much stronger and resilient. However, further efforts are needed to continue correcting the remaining imbalances, especially private sector delivering and unemployment.