, which was 3. 6 %. overall, it may be concluded that the attainment of the budget deficit target for this year, namely 2. 2 % of gdp, is subject to significant risks. if they are not to materialise, potential slippage from the projections must be monitored so that there is time to react and the objectives pursued are not compromised. in this respect, the forecasts published by the european commission several weeks ago should be taken as a warning sign, given that a deficit almost 0. 5 pp of gdp higher than this target is estimated. should this failure to hit the target be confirmed, the structural deficit would also be impaired, making fiscal policy in 2017 procyclical, given the estimation that the output gap would have already moved into positive territory. the importance of budgetary consolidation i should now like to move on to the importance of budgetary consolidation. since 2009 spain has embarked on an intense process of public finances consolidation, which has entailed a reduction in the overall general government deficit of 8 pp of gdp. achieving such an adjustment proved very difficult, given the prevailing circumstances. yet even if the budgetary targets for 2018 are met, public finances, as projected in the draft budget, will still be in deficit to the tune of 2. 2 % of gdp, while public debt will be standing 7 / 9 at around 97 % of gdp. given that the spanish economy is regaining, according to most analysts, a neutral or slightly positive cyclical position, this will entail, for 2018, a structural deficit – i. e. the cyclically adjusted total deficit – higher than the budgeted figure of 2. 2 %. against this background, the stability programme update considers a continuation of the fiscal adjustment which, in any event, would still entail in 2021, eight years after the start of the economic expansion, a structural deficit of over 1 pp of gdp and public debt of almost 90 % of output. maintaining levels of public debt around those currently prevailing in the spanish economy involves significant costs that need to be taken into account. it entails the deviation of major resources for interest payments and, above all, vulnerability in the face of episodes of tightening financing conditions on international markets, restricting the possibilities of pursuing a countercyclical fiscal policy at times of economic recession. in sum, it is most important to harness the current favourable circumstances of the spanish economy to redress, as soon as possible, our structural deficit and public debt levels, bringing them

##tized credit markets. securitization is an important funding source for bank and nonbank lenders. when a lender extends credit, it makes the decision of whether to keep loans on its books or to securitize and sell them to other investors. if kept on the lender ’ s books, the holdings have to be financed, either by borrowing or by using funds that could be deployed for other purposes, including making other loans. thus, in many circumstances the lender finds it advantageous to sell assets through the securitization channel, allowing other investors to ultimately hold the assets and hence bear the risk. the amount of credit financed through securitization rivals that provided directly by banks. indeed, even excluding the sizable securitization markets for mortgage credit, approximately $ 2 trillion in loans to consumers, students, and businesses were securitized over the past decade. 2 the securitization market became significantly disrupted during the financial crisis in 2008 and 2009 in all areas outside of conforming agency mortgage - backed securities. liquidity for securitized products deteriorated, leading to an unprecedented widening of spreads. issuance virtually ground to a halt, resulting in significant funding concerns for a variety of lenders who relied on securitization. these funding strains prompted some lenders to dramatically tighten underwriting standards, thus reducing overall credit to consumers and businesses. a prolonged shutdown of the securitization market could have compounded the credit crunch and increased the risk of an even more severe contraction of the economy than we experienced. in response, the talf was created to provide liquidity in the form of term loans to investors in the least risky part — the aaa tranches — of particular types of asset - backed securities, including those backed by consumer loans, student loans, small business loans, and commercial real estate loans. the hope was that, by providing loans directly to investors against asset - backed collateral, the talf would help stabilize and improve the prices at which those securities could be sold, thus reducing lenders ’ costs of funds. with lenders ’ funding strains alleviated, the extension of credit to consumers and other borrowers could occur on more favorable terms. while the talf is essentially similar to other programs in its basic objective of providing liquidity and encouraging the extension of credit, it is worth highlighting that the talf has several features that are not common in other liquidity facilities. first, talf loans are non - recours