The recovery is strong and imbalances are falling fast, aided by past reforms. External tailwinds and expansionary fiscal policy also buoyed activity and job creation. The economy is now more resilient but adjustments are incomplete and structural weaknesses persist. In particular, high unemployment, elevated public debt and shortcomings in the regional fiscal framework, feeble productivity growth, and the still large negative net international investment position pose policy challenges.

Abstract

The recovery is strong and imbalances are falling fast, aided by past reforms. External tailwinds and expansionary fiscal policy also buoyed activity and job creation. The economy is now more resilient but adjustments are incomplete and structural weaknesses persist. In particular, high unemployment, elevated public debt and shortcomings in the regional fiscal framework, feeble productivity growth, and the still large negative net international investment position pose policy challenges.

Fund Relations

(As of November 30, 2016)

Membership Status: Joined September 15, 1958.

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Outstanding Purchases and Loans: None

Latest Financial Arrangements: None

Projected Payments to Fund

(SDR Million; based on existing use of resources and present holdings of SDRs):

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2016 Article IV Consultation: Discussions took place in Madrid and Frankfurt from October 11–24 and December 7–13, 2016. The staff team comprised Ms. Andrea Schlechter (head), Ms. Nina Budina, Mr. Federico Grinberg, Mr. Daehaeng Kim (all EUR), and Mr. Phakawa Jeasakul (MCM). Mr. Fernando Jimenez-Latorre (Executive Director), Mr. Jorge Dajani (Alternate Executive Director), and Ms. Estefania Sanchez Rodriguez (Advisor to the Executive Director) attended the discussions. The mission met Economy, Industry and Competitiveness Minister De Guindos, Finance and Public Functions Minister Montoro, Bank of Spain Governor Linde, and other senior officials. The mission also met with representatives of the financial sector, industry, trade unions, academia, think tanks, parliament, and political parties. The concluding statement was published and the staff report is expected to be published as well. Spain is on a standard 12-month cycle. The last Article IV consultation was concluded on July 27, 2015 (IMF Country Report No. 15/232).

Financial Sector Assessment Program (FSAP): A FSAP Update was conducted in two missions (February 1–21 and April 12–25, 2012). On June 8, 2012, the FSAP discussions were concluded and the documents published. The next FSAP is currently scheduled to take place in 2017.

Exchange Rate Arrangements and Restrictions: Spain’s currency is the euro, which floats freely and independently against other currencies. Spain has accepted the obligations of Article VIII, Sections 2, 3, and 4, and maintains an exchange rate system free of restrictions on payments and transfers for current international transactions, other than restrictions notified to the Fund under Decision No. 144 (52/51).

Statistical Issues

(As of November 30, 2016)

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Table 1.

Common Indicators Required for Surveillance

(As of November 30, 2016)

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Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis a vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Reflects the assessment provided in the data ROSC or the Substantive Update for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

Same as footnote 7, except referring to international standards concerning source data, statistical techniques, assessment and validation of source data, assessment, and revisions.