which has fewer distorting effects on growth and the allocation of resources and where the tax burden in spain is lower than in other developed countries. looking ahead, moreover, it cannot be ruled out that the temporal tax increases applied may have to be replaced in time by measures of a permanent nature. simultaneously, it is important that the process of budgetary consolidation be accompanied by a strengthening of the national budgetary framework, so as to allow governments at all levels to meet their commitments. in this respect, the reform of the constitution in september 2011 so as to include the deficit and debt ceilings set at european level, which was subsequently implemented in the draft budgetary stability law, was designed to meet this need and is fully consistent with the recent eu governance reforms. following the approval of the budgetary stability law by parliament, it is crucial that all the instruments envisaged in it, particularly the monitoring and control mechanisms and those aimed at ensuring that the targets set are met by all levels of government, be set in train immediately. i think it is worth looking more closely at this law because the success of the fiscal consolidation process depends largely on whether it is applied properly. the 2011 budget outturn highlighted the consequences of the unavailability of information, which prevented budget deviations from being detected in time and delayed the activation of mechanisms to ensure the consolidation targets were met. the new stability law should significantly improve the transparency of government action in at least three respects. first, it is essential for the budget outturn of local and regional governments to be published regularly, with the same periodicity, level of detail, lag and ease of access as that of the state. second, the information contained in the state and regional government budgets must be improved, so that the assumptions underlying revenue and expenditure projections are known and the information is made available on these items in national accounts terms, which is the relevant definition for the existing fiscal rules. finally, the information in the adjustment plans at the various levels of government should be made public and presented in a format allowing it to be analysed and compared with the initial budgets. in addition, the mechanisms obliging government deficits to be corrected have clearly proved to be insufficient. in this case, the draft stability law includes new coercive instruments to ensure the budget targets are met by all levels of government. provision is made for imposing sanctions, regional government expenditure must be automatically adjusted in certain cases of non - compliance and it is even envisaged that

offset the fall in revenue due to the unfavourable trend in tax bases deduced from the macroeconomic scenario accompanying the budget. last year ’ s experience, when the bulk of the budget deviation stemmed from the adverse performance of government revenue, showed that it is essential to budget prudently for this variable. in this respect, the projected course of overall budget revenue is subject to downside risks. the reasons for this are various. first, because both the expected corporate income tax receipts and any other tax revenue will depend on the ultimate effectiveness of the numerous legislative changes, which is particularly uncertain in the case of the special charge on undeclared income. it should also be emphasised that the spanish economy is in the midst of a process of macroeconomic adjustment and, as noted above, its growth prospects depend on the external sector, which tends to yield only moderate increases in tax revenue in the short and medium term, particularly if this is accompanied, as in the spanish case, by an adjustment in the real estate sector. on the expenditure side, the draft budget proposes highly significant reductions concentrated in capital expenditure and also in current transfers and goods and services purchases. in the case of transfers to government - owned corporations, it is important for the planned reduction to be accompanied by adjustments of similar size in the effective expenditure of these entities, so as to achieve a lasting reduction of the imbalances. here, too, the budget projections are generally not free from risk. first, because it is often difficult to restrain the high inertia of certain items, frequently resulting in the past in overshooting with respect to the initially budgeted figure, particularly in the case of goods and services purchases. nor can we rule out further unfavourable changes in those items, such as unemployment or pension benefits, whose size depends on external factors, such as the unemployment rate, population or inflation. this is related to the fact that the risk of deviating from the budget is higher in social contributions. it is essential to prevent these risks from materialising by ensuring a meticulous and rigorous budget outturn allowing budget deviations to be detected in time and any required remedial action to be taken. should this be necessary, additional adjustments would have to be made in current expenditure, given that the freedom of action in relation to capital expenditure has shrunk enormously, and new tax measures would have to be taken, preferably in the area of bis central bankers ’ speeches indirect taxation,