assets, the increase was of the order of 1 pp between these dates, to 5. 8 %. the increase in capital has meant a notable extension of absorption capacity for the losses that will emerge as a result of the growth of bad debts that the crisis will cause. almost half this total amount of capital is in the form of buffers above the regulatory minimum level. these may be released, as i will explain later, as part of the prudential response to the crisis should it prove necessary. the amount involved - some €90 billion could cover a volume of losses equivalent to almost twice the current volume of doubtful loans in the system, i. e. approximately 8. 2 % of the total credit to the resident private sector. as i said, the risks to financial stability have been mitigated by the various economic policy measures adopted. in particular, these measures should provide for more benign developments in npls by directly supporting the financial position of households and firms and through macroeconomic stimulus. moreover, the aforementioned absorption capacity for losses arising through npls is strengthened when the positive effect of credit moratoria and of the government - approved programme of guarantees for firms is taken into consideration. in the case of temporary moratoria set in place both by the authorities and by banks themselves, these should help enable those households most affected by the crisis to face this critical period with greater peace of mind. at the same time, they provide for containment of npls in the short run and, foreseeably, also in subsequent phases, provided that a portion of these more vulnerable households can gradually regain their habitual levels of income. three clarifications are, in any event, called for regarding the general situation of the financial sector and the potential impact of the crisis on it. first, the figures for the 2020 decline in gdp reflected in the macroeconomic scenarios i have outlined would entail the biggest economic contraction in spain for a single year in recent history. they also exceed the assumptions of any stress test performed on the banking sector in the past. this will give rise to an increase in the npl ratio, albeit on what is still an uncertain scale. on banco de espana estimates, a 1 pp decline in gdp has, on historical averages, given rise to a 0. 7 pp increase in the npl ratio. that said, the scale of the decline in output projected at present is very high, which might give rise to a proportionately greater effect. it is also true that

it is a matter of concern that the country continues to make only slow progress in areas such as “ innovation ” and “ business sophistication ”, both of which are expected to be key to meeting future developmental objectives. furthermore, it should be acknowledged that, even when the changes have been significant, they are not all negative. in particular, it is encouraging that there is significant progress in the “ goods market efficiency ” category, where the rank has improved markedly, from position 93 in 2008 to 68, although it is a deterioration from last year ’ s rank of 58. this can be seen as a reflection of the early gains from recent initiatives to improve the business climate. since bis central bankers ’ speeches these reforms remain work - in - progress, we should be able to maintain momentum so that further advances can be anticipated with some degree of confidence. the report further indicates that the decline in the overall ranking is concentrated in five areas. these are : infrastructure, macroeconomic environment, health and primary education, labour market efficiency, and technological readiness. i have decided to focus on only three of these pillars, in part because the lacklustre rankings are glaring for the three - year period to - date. first, “ infrastructure ” : the steep decline from 52 in 2008 / 09 to 92 is worrying, especially at a time when government spending in this particular area has been so extensive. hopefully, this investment will soon bear fruit when the beneficial externalities of upgraded roads and improved electricity supply unfold. nevertheless, this serves as a timely reminder of the importance of both investment and adequate provision for maintenance. this includes a contribution by both the public and private sectors, and is especially important if we are to overcome the constraints associated with land - locked economies. second, “ macroeconomic environment ” : the decline in the ranking is even more pronounced than that of “ infrastructure ”, from 22 in 2008 / 09 to 82. i would, however, suggest that this probably exaggerates any underlying deterioration. i have reason to believe that this assessment is driven largely, if not entirely, by recent trends in the fiscal budget which, as you very well know, has registered substantial deficits in recent years, and this is coupled with an accumulation of public debt. we can take comfort in the fact that the government has initiated a medium - term programme of fiscal consolidation which, all things equal, should help reverse the deficit. indeed the relatively small decline from last year ’ s ranking of 74 indicates that this may