euro exchange rates, which poses an additional difficulty. in the area of national policies, the leeway for applying demand - side policies is scant. in this respect, let me discuss in more detail the challenges ahead for fiscal policy. fiscal policy challenges as i have already indicated, progress in the correction of european fiscal imbalances has been significant. the data for 2013 show, however, that six years after the economic crisis began, ten countries in the european union countries had budget deficits of over 3 % of gdp and public debt levels stand at record highs in many member countries. having now emerged from the phase of financial and banking instability, the need for fiscal consolidation will continue to condition economic policy in europe over the coming years, although the adjustments planned are on a lesser scale than those already implemented. in the case of spain, the consolidation drive still ahead remains substantial. according to the latest stability programme update, the planned reduction in the budget deficit between 2014 and 2017 is 5. 5 pp of gdp, and rises to 6. 4 pp of gdp in terms of decreasing the primary deficit. bis central bankers ’ speeches completing the fiscal consolidation process must remain an overriding priority of spain ’ s economic policy. this effort is necessary to maintain the confidence of economic agents, to continue to advance in the normalisation of financing and to restore the room for manoeuvre in budget policy. meeting targets is crucial first for containing and, subsequently, reducing the public debt / gdp ratio. it will be difficult to curb the rising trend of public debt now the latter has reached high levels and the outlook for economic growth and inflation is moderate. if the interest on the debt is higher than the nominal growth rate of the economy, the public debt / gdp ratio grows inertially, even when public revenue and spending are balanced. this effect stems from the pressure generated by the interest burden, arising from high debt which cannot be countered by growth in real gdp and changes in inflation. in this situation, then, in order to avoid an increase in debt, it is not enough to attain an overall balanced budget ( that is, net of the interest burden ) ; rather, sizeable primary surpluses must be achieved and maintained, which is particularly difficult in a setting of low growth and low inflation. furthermore, the short - term negative effects on economic growth of the fiscal adjustment should be considered, which contributes to the above - mentioned inertial increase in debt. against the backdrop of a brighter economic outlook,

favourable impact has also been exerted by the measures adopted by euro area member state governments in terms of fiscal consolidation and the approval of structural reforms, particularly visible in those economies that were subject to financial tensions. the support programmes for greece, ireland, portugal and cyprus also unfolded favourably. indeed, ireland and portugal have already exited their respective financial assistance programmes without resorting to any additional precautionary mechanism. greece, for its part, posted a primary fiscal surplus in 2013, indicating that its public finances have been redressed. but the challenges ahead remain significant, as highlighted by the european commission in the annual revision of the exercise on macroeconomic imbalances within the area. measures by the ecb are contributing to shaping a setting favourable to recovery. since the onset of the crisis, monetary policy has been strongly accommodating, more so both in 2013 and in 2014 to date. on the conventional front, official interest rates have been cut on three occasions since january last year. as a result, the main refinancing operations rate has reached, for practical purposes, its lower bound ( 0. 15 % ). and the remuneration banks receive for their deposits in the eurosystem stands, following the recent decisions adopted on 5 june, in negative territory ( – 0. 10 % ), which should promote a greater and lasting injection of liquidity into the markets. as regards liquidity, moreover, it was resolved at the governing council meeting on 5 june to extend the current policy of fixed rate full allotment tender procedures at least until bis central bankers ’ speeches december 2016. it was also decided to suspend the fine - tuning operation sterilising the purchases under the securities market programme. the ecb thereby ensures the continuity and scope of the policy of generous provision of liquid funds adopted since what was practically the very onset of the crisis. finally, regarding unconventional measures, and following the adoption last year of forward guidance, significant additional steps have been taken in june. firstly, targeted long - term refinancing operations explicitly geared to promoting bank lending to households and firms were announced. further, it was decided to step up the work under way to enable a framework to be designed for outright abs purchases by the ecb. the aim of these purchases is to improve the functioning of the monetary policy transmission mechanism, which is still adversely affected by the financial market segmentation induced by the crisis. progress in the internal process of adjustment the turnaround in the spanish economy would