Council Opinion of 28 February 2000 on the updated stability programme of Spain for the period 1999 to 2003
C 98/4 EN Official Journal of the European Communities 6. 4. 2000 COUNCIL OPINION of 28 February 2000 on the updated stability programme of Spain for the period 1999 to 2003 (2000/C 98/04) primary current expenditure, and allows for a reinforcement of government investment and for a reduction in tax burden. As the reduction of the government deficit is based on the expenditure side, the still-pending the implementation of reform of the National Budget Law to reinforce the control of public spending would be welcome. the safety margin will The underlying budgetary position corresponding to the targeted surplus of 0,1 % of GDP in 2002 would provide sufficient safety margin to prevent the deficit from breaching the 3 % of GDP threshold during a normal cyclical downturn and would also allow for an additional margin in case of increase unforeseen developments; further in 2003. The Council the the updated Stability medium-term budgetary target of the Programme is Stability the envisaged widening of the safety margin is justified in order to cope with the budgetary consequences of ageing. In this respect, the commitment made to further increase the Social Security reserve fund created in 2000. in conformity with the provisions of considers and Growth Pact. The Council therefore considers that the Council welcomes The Council notes with satisfaction that the budgetary adjustment is to be shared by all sub-sectors of government, in particular the fact that the territorial governments, in the framework of the existing internal stability pact, are targeted to be in balance from 2001 on. The Council stresses that the increasing role of territorial governments in various categories the of expenditure requires present inter-governmental coordination mechanisms. the continued functioning of In the light of recent developments on prices, the Council that wage developments in Spain must considers essential continue to be geared towards price stability. Additionally, the Council considers that fiscal policy should be ready to tighten further to counteract any possible overheating risk. The Council considers that the programme is consistent with the Broad Economic Policy Guidelines. The Council notes with approval that the update acknowledges the increasing role of structural policies and fiscal consolidation in the EMU. Structural reforms have indeed played an important role in increasing the potential output of the Spanish economy, keeping a positive growth differential with respect to the EU area along with a strong job creation. The Council, therefore, encourages the Spanish Government to continue implementing the pending structural reforms. THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(3), Having regard to the recommendation of the Commission, After consulting the Economic and Financial Committee, HAS DELIVERED THIS OPINION: the strategy On 28 February 2000 the Council examined Spain’s updated stability programme which covers the 1999 to 2003 period. The Council notes with satisfaction that the programme reaffirms in the 1998 Stability adopted Programme: promoting healthy economic growth through fiscal consolidation and structural reforms. The programme’s objectives are to turn the estimated 1999 general government deficit of 1,3 % of GDP into a surplus of 0,2 % of GDP in 2003, while the gross debt ratio will decrease to 55,8 % of GDP. Moreover, the programme builds on the continuation of expenditure the containment. consolidation budgetary based on The Council welcomes the record of implementation of the 1998 Stability Programme, where GDP has grown briskly along with strong job creation. As regards public finances, general government balance and debt targets seem to have been exceeded. However, price developments the second half of 1999 have been worse than expected. since The macroeconomic scenario in the updated programme assumes output growth to decelerate from its present high rate (3,7 % in 1999) towards close to trend over the period 2000 to 2003 (3,3 % on average). The Council notes that this macroeconomic its opinion on the initial stability programme (2) the Council considers that a continuation of the strategy adopted, based on structural stable monetary framework under EMU and sound budgetary consolidation, should allow the Spanish economy to develop in line with the medium-term macroeconomic scenario. scenario appears along with the Following realistic. reforms The Council notes with satisfaction that the update continues with the budgetary strategy, which relies on the restraint of (1) OJ L 209, 2. 8. 1997, p. 1. (2) OJ C 124, 5. 5. 1999, p. 1