Council Opinion of 15 March 1999 on the stability programme of Spain, 1998 to 2002
Date: 1999-03-15
Institutions: Council of the European Union
Subjects: Economic and Monetary Union, Spain, coordination of EMU policies, economic convergence, economic policy, economic stabilisation

5.5.1999

EN

Official Journal of the European Communities

C 124/1

I

(Information)

COUNCIL

COUNCIL OPINION

of 15 March 1999

on the stability programme of Spain, 1998 to 2002

(1999/C 124/01)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 1466/97 of July
1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic
policies (1), and in particular Article 5(1) and (2) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 15 March 1999 the Council examined the stability
programme for Spain which covers
the 1998 to 2002
period. The Council notes that the programme reaffirms the
two-handed strategy adopted in the April 1997 Convergence
Programme: promoting non-inflationary employment-oriented
growth through budgetary consolidation and structural reform.
The Council welcomes the programme’s objective of turning
the general government deficit into a surplus of 0,1 % of GDP
in 2002, while the gross debt ratio is expected to decrease to
59,3 % of GDP. Moreover, the Council notes with satisfaction
that
the
the programme builds on the continuation of
budgetary consolidation based on expenditure containment.

The programme is built upon a macroeconomic scenario
which assumes output growth to decelerate from its present
high rate (3,8 % in 1998) towards close to trend over the
period 2000 to 2002 (3,3 % on average). Although output
than assumed in the
growth in 1999 could be lower
international
programme mainly
the
the medium-term
environment,
scenario
macroeconomic
a
continuation of
the strategy adopted, based on structural
reforms along with the stable monetary framework under
EMU and sound budgetary consolidation, should allow the
Spanish economy to develop in line with the medium-term
macroeconomic scenario.

the Council considers that

realistic.

appears

current

Indeed,

due

to

The Council welcomes the Spanish budgetary strategy which
relies on the restraint of primary current expenditure, and
allows for a reinforcement of government investment and for
a reduction in the tax burden. Interest payments as a share of
GDP are expected to decrease moderately while primary

also welcomes

current expenditure would carry the bulk of the adjustment.
The Council
in
government investment given the catching-up needs of Spain.
In addition, this will strengten compliance with the golden rule
which Spain satisfies since 1997.

envisaged increase

the

The underlying budgetary position of the targeted surplus of
0,1 % of GDP in 2002, under the central macroeconomic
scenario, would provide sufficient room to prevent the deficit
from breaching the 3 % of GDP threshold during cyclical
downturn and would also allow for an additional
safety
margin in case of unforeseen developments. The Council
therefore considers that the medium-term budgetary target of
the Stability Programme is in conformity with the provisions of
the Stability and Growth Pact. Nevertheless, the Council recalls
that
the long-term problem of population ageing must be
addressed in the near future, and additional reforms will then
be
the
framework,
government’s commitment to take further steps with a view
to a greater rationalisation of the social security system.

the Council notes

required.

In this

The foreseen budgetary adjustment is to be made mainly by the
State, though all the general government sectors are committed
to the budgetary effort. Social security accounts are expected to
be in balance in the year 2000. The territorial government
in the framework of the existing internal stability
accounts,
pact between the regions and the State, are targeted to be in
balance in the year 2001. The Council stresses that
the
increasing role of territorial governments in various categories
of expenditure requires
the
present inter-governmental coordination mechanisms.

the continued functioning of

the Economic Policies of

The Council considers that the programme is consistent with
the Council Recommendation of 6 July 1998 on the Broad
the Member States
Guidelines of
and the Community (2). The Council notes with approval the
programme’s emphasis on structural policies in the EMU
context. Structural reforms have indeed played an important
role in increasing the potential output of the Spanish economy,
keeping a growth differential with respect to the EU area in a
framework of
low inflation and high employment creation.
Therefore, the Council encourages the Spanish Government
to implement
envisaged in the
structural measures
programme.

the

(1) OJ L 209, 2.8.1997, p. 1.

(2) OJ L 200, 16.7.1998, p. 34.