on taxation are also taken into account, it is clear that revenue growth needs to be monitored constantly over the course of the year, so that a timely adjustment can be made to spending or revenue in the event that the risks to the deficit target materialise. moreover, in such a decentralised country as spain, where more than 40 % of public spending is made at the local and regional level, the state and social security budgets give merely a partial view of the budgetary policy of the public sector as a whole for next year. from this perspective, the updated stability programme to be published in the next few days is particularly important, since it consolidates the budgets of central government agencies with those of regional government and local government. this document should enable a complete analysis of budgetary projections to be performed and is, in fact, that used by the european commission as a basis for its assessment of spanish fiscal policy. 7 / 9 the importance of budgetary consolidation before concluding my address, i should like to offer some reflections on the importance of completing the budgetary consolidation process. spain ’ s public debt - to - gdp ratio remains very high. despite its recent stabilisation, it is close to 100 % and more than 60 percentage points above its pre - crisis level. moreover, the budget deficit ( both the total deficit and the structural deficit ) is also very high and exceeds that of most of our european partners. the outstanding adjustment is still significant, despite the current context of a high pace of growth and low interest rates, that is relatively conducive to reducing the structural budget deficit and the public debt - to - gdp ratio. reducing fiscal imbalances is important in order to moderate the future financial costs associated with public debt, and also to reduce the vulnerability of the economy to a possible tightening of financial conditions, without forgetting the need to restore scope for a fiscal policy response in the event of possible adverse growth scenarios. for all these reasons, it is crucial to adopt a time perspective that goes beyond the annual budgetary exercise, with a detailed and credible deficit correction plan geared towards gradually reducing public debt. the updated stability programme, which i have already mentioned, provides an opportunity to define such a plan, incorporating the budget plans of all tiers of government within the framework of medium - term public finance developments. moreover, i should also point out that budgetary consolidation is fundamental for achieving the aim of placing our public finances in a better position from which to face the challenges of an age

##ing population. demographic developments are currently ( and in future will be even more so ) a fundamental determinant of the growth in certain public spending items, such as health, care for the elderly and, in particular, pensions. they must be taken into account in the short, medium and long - term consolidation strategy. finally, we should not forget that, apart from the pace of reduction of the budget deficit, the intensity and duration of the public sector deleveraging will also hinge on macroeconomic factors and, in particular, on the economy ’ s growth potential. indeed, the problems of sustainability of public finances may be relieved if employment and productivity behave favourably. the improvement in the outlook for economic growth and employment in the spanish economy still requires pressing ahead with various structural reforms. delaying the implementation of such reforms, or the reversal of any of those introduced since the start of the crisis, would undoubtedly damage the growth outlook. conclusions i will now conclude. the spanish economy continues to record high rates of gdp and employment growth and is showing notable resilience in the face of gradual disappearance of the so - called “ tailwinds ”. these positive developments are occurring against a background in which, moreover, competitiveness gains are being sustained, our exports continue to gain market share and the substantial external surplus persists. that said, this favourable situation 8 / 9 should not be understood as meaning that spain has managed to completely overcome the imbalances built up during the previous expansion and during the crisis that began in 2007, as demonstrated by the figures for unemployment, public debt and external net borrowing, among others. persevering with reforms to increase the economy ’ s growth potential, maintaining competitiveness gains and fiscal consolidation policies are a prerequisite for progress in making the reductions required in the budget deficit and public debt, controlling the economy ’ s financing costs, improving the balance of payments and, last but not least, increasing the spanish economy ’ s capacity to generate employment. thank you for your attention. 9 / 9