Council Opinion of 28 February 2000 on the updated stability programme of Spain for the period 1999 to 2003
Date: 2000-02-28
Institutions: Council of the European Union
Subjects: Spain, economic convergence, economic cooperation, economic stabilisation, public finance

C 98/4

EN

Official Journal of the European Communities

6.4.2000

COUNCIL OPINION

of 28 February 2000

on the updated stability programme of Spain for the period 1999 to 2003

(2000/C 98/04)

primary current expenditure, and allows for a reinforcement
of government investment and for a reduction in tax burden.
As the reduction of the government deficit is based on the
expenditure side,
the still-pending
the implementation of
reform of the National Budget Law to reinforce the control
of public spending would be welcome.

the safety margin will

The underlying budgetary position corresponding to the
targeted surplus of 0,1 % of GDP in 2002 would provide
sufficient safety margin to prevent the deficit from breaching
the 3 % of GDP threshold during a normal cyclical downturn
and would also allow for an additional margin in case of
increase
unforeseen developments;
further in 2003. The Council
the
the updated Stability
medium-term budgetary target of
the
Programme is
Stability
the
envisaged widening of the safety margin is justified in order
to cope with the budgetary consequences of ageing. In this
respect,
the commitment made to
further increase the Social Security reserve fund created in
2000.

in conformity with the provisions of
considers

and Growth Pact. The Council

therefore considers that

the Council welcomes

The Council notes with satisfaction that
the budgetary
adjustment is to be shared by all sub-sectors of government,
in particular the fact that the territorial governments, in the
framework of the existing internal stability pact, are targeted to
be in balance from 2001 on. The Council stresses that the
increasing role of territorial governments in various categories
the
of expenditure requires
present inter-governmental coordination mechanisms.

the continued functioning of

In the light of recent developments on prices, the Council
that wage developments in Spain must
considers essential
continue to be geared towards price stability. Additionally,
the Council considers that fiscal policy should be ready to
tighten further to counteract any possible overheating risk.

The Council considers that the programme is consistent with
the Broad Economic Policy Guidelines. The Council notes with
approval that the update acknowledges the increasing role of
structural policies and fiscal consolidation in the EMU.
Structural reforms have indeed played an important role in
increasing the potential output of
the Spanish economy,
keeping a positive growth differential with respect to the EU
area along with a strong job creation. The Council, therefore,
encourages the Spanish Government to continue implementing
the pending structural reforms.

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 7 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(3),

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

the

strategy

On 28 February 2000 the Council examined Spain’s updated
stability programme which covers the 1999 to 2003 period.
The Council notes with satisfaction that
the programme
reaffirms
in the 1998 Stability
adopted
Programme: promoting healthy economic growth through
fiscal consolidation and structural reforms. The programme’s
objectives are to turn the estimated 1999 general government
deficit of 1,3 % of GDP into a surplus of 0,2 % of GDP in
2003, while the gross debt ratio will decrease to 55,8 % of
GDP. Moreover, the programme builds on the continuation
of
expenditure
the
containment.

consolidation

budgetary

based

on

The Council welcomes the record of implementation of the
1998 Stability Programme, where GDP has grown briskly
along with strong job creation. As regards public finances,
general government balance and debt targets seem to have
been exceeded. However, price developments
the
second half of 1999 have been worse than expected.

since

The macroeconomic scenario in the updated programme
assumes output growth to decelerate from its present high
rate (3,7 % in 1999) towards close to trend over the period
2000 to 2003 (3,3 % on average). The Council notes that this
macroeconomic
its
opinion on the initial stability programme (2)
the Council
considers that a continuation of the strategy adopted, based
on structural
stable monetary
framework under EMU and sound budgetary consolidation,
should allow the Spanish economy to develop in line with
the medium-term macroeconomic scenario.

scenario appears

along with the

Following

realistic.

reforms

The Council notes with satisfaction that the update continues
with the budgetary strategy, which relies on the restraint of

(1) OJ L 209, 2.8.1997, p. 1.
(2) OJ C 124, 5.5.1999, p. 1.