why spain is not greece

7/31/2019 Why Spain is Not Greece

1/57

King dom o f Spa in

Econ om ic Po l i cy an d 2 0 1 0 Fu n d in g

S t ra tegy

Secre t a ry o f St a te fo r t he Econom yFebruary 2010


2/57

High l i gh ts

The long g r ow t h cyc le and t he cr i si s

sca con so at on an st r u ct u r a r e o r m

Fu n d in St r a t e o f t h e Kin d om of S ain

~2009~

1


3/57

Hi g h l i g h t s

Long g row t h cycle previous to the international crisis Important challenges ahead: Unem p loym en t and de f i ci t ,

structural shortcomings

The S an ish Go ver n m en t i s d et e r m i ned t o a ct :

Fiscal consolidation: A cut of5 .7% of GDP in structural

primary deficit in 2010-2013

Structura re orms to oost potentia GDP: Sustaina eEconomy, Bank Reorganisation, Pensions, Labour Market

2

institutional ability for reform


4/57

High l i gh ts


Fisca l conso l ida t ion and s t r uc t u r a l r e fo r m

3


5/57

19 94 -2 00 8 : Conv ergence and Deb t r educt ion

GDP p er cap i t a h as leap t f o r w ar d , ex ceed in g t h e av er age o f EU- 25 Fisca l r ig ou r d u r in g t h e g ood t im es al low e d d eb t t o GDP t o b e m or e

Debt t o GDP(% nominal GDP)GD P(Year on year real growth rates)

2%

4%

6%Spain

-60%

70%

80%Euro-area

-6%

-4%

-2%

0%

30%

40%

50%Spain

4

Source: Eurostat .

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: Eurostat.


6/57

I n v e st m en t b i n g e: h o u sin g an d b ey o n d

W h at h as fu el led d om est i c d em an d is a soar in g in v est m en t r at e,w i t h t h e n at ion al sav in gs r at e st ay in g close t o Eu rozon e av er age

I nves tm en t ra t e vs . Sav ings ra te% nominal GDP

,

Sav ings r a te(% nominal GDP)

25

30

30

34

10

15

18

22

99

00

01

02

03

04

05

06

07

08

09

2000 2005 2009*

5

Source: Eurostat .

* 2009Q3

19

20

20

20

20

20

20

20

20

20

20

Savings rate Investment rate

Source: Eurostat.


7/57


Th e r esid en t ia l r eal est at e sect o r g rab bed a n on -su st a in ab le sh ar eo f GDP an d em p loy m en t

13

14

Cons t r uc t ion Sect o r : Gross Value Added and Em p loym ent(% Total Value Added and of Total Employment)

91011

67

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

1 1 1 1 1 2 2 2 2 2 2 2 2 2 2

Full-time equivalent employees Gross Value Added

6Source: National Statistics Institute, Spain.


8/57


b u t Sp ain h as also in vest ed h eav ily in eq u ipm e n t , in f r ast r uct u rean d Resear ch an d Dev elo pm en t

101010

I n v est m en t i n eq u ip m en t(average growth, 1995-2008 in percent)

5.0

Pu b l i c I n v e st m e n t(% of GDP)

2

4

6

2

4

6

2

4

6

1.0

2.0

3.0

.

0Germ

an

Netherla

Finland

Austria

EU-15

Denm

ark

UKItaly

France

Spain

0Germ

an

Netherla

Finland

Austria

EU-15

Denm

ark

UKItaly

France

Spain

0Germ

an

Netherla

Finland

Austria

EU-15

Denm

ark

UKItaly

France

Spain

0.0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

7

dsdsds

Source: Eurostat.

-


9/57

I n t en si v e i n em p lo y m en t

Resid en t ia l con st ru ct ion at t r act ed low sk i l led lab ou r , d r ag g in gp r od u ct i v i t y lo w er

Lab ou r su p p ly m at ch ed t h is d em an d w i t h t he h elp o f im m ig r at ion

Act i ve popu la t ion(Growth rat es from 2005Q1 to 2009Q3) Labo r p roduc t i v i t y

Relative to EU-27 PPP

f l o w s

8%

10%

12%

104105

106107

0%

2%

4%

100101

102103

Be

lgiu

G

erman

Spa

i

Franc

Ita

l

Un

ite

d

K

ing

do

8Source: Eurostat . Labor Force Survey.

Source: Eurostat. Labor Force Survey.

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009


10/57

Cost com pet i t i veness

Loss o f com p et i t iv en ess h as b een m o der at e in t h e t r ad ab le sect or

Nom i n al d iv er gen ce st em s f r om n on - t r ad ab les ( w h er e t he b u lk o ft h e ad j u st m en t is t ak in g p lace)

Uni t l abour cos t index(Relative to eurozone 1999= 100)

Manu factu r ing ULC ind ex(Relative to eurozone 1999= 100)

110115120125

110120130140

95100

99

00

01

02

03

04

05

06

07

08

09

8090

99

00

01

02

03

04

05

06

07

08

09

1 2 2 2 2 2 2 2 2 2 2

Spain Italy Germany France

1 2 2 2 2 2 2 2 2 2 2

Spain Italy Germany France

9Source: Eurostat .

Source: Eurostat


11/57

Ex p o r t s sh o w u n d e r l y i n g im p r o v e m en t i n su p p l y

I n sp i t e o f b r i sk d om est i c dem an d an d w an in g p r icecompet i t i veness

Spain 's m a r k et sh ar es h av e ou t p er fo r m ed m o st o f p eer s

150

Share i n w o r ld m erchand ise expo r t s( I ndex 2000= 100) Share i n w o r ld expo r t s o f serv i ces*( I ndex 2000= 100)

100

125

90

100

110

50

75

2000 2001 2002 2003 2004 2005 2006 2007 2008

60

70

80

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Spain Germany France United StatesSpain Germany France United States

10

Source: International Monetary Fund. Source: World Trade Organisation.* Services other than t ransportation and t ravel.


12/57

Serv ices Ex por t s m ark e t shar e has incr easeds ign i f i can t l y

ShareofserviceexportsintheOCDE,byservice Am o ng o t her s, ser v ices r ela t ed t o ar ch i t ect u r e, con st r u ct ion an d

en gin eer in g h av e m o re t h an d ou bled m a r k et sh ar e

8

10

2000

2007

4

6

0

2

otal

ion

ism

ns

l, , ng

nce

cial

ion

s nd

r na

lto e

nt

en

t

T

Transporta

t

serv

ices

Tou

Com

mun

ica

ti

Arc

hitec

tur

co

ns

truc

tio

and

eng

ineeri

Insura

Finan

Informa

serv

ic

R

oya

lties

pa

ten

t

Othe

Pro

fess

io

serv

ices

En

terta

inm

Govern

11Source: OECD.


13/57

FDI f l ow s have incr eased sign i f i can t l y

Ou t w ar d FDI st ock p er cap i t a h as g r ow n f ast er in Sp ain t h an int h e Eu r ozo ne

Rem ain s a m a j or d est in at ion o f in t er nat ion al in vest m e nt

Out w ard FD I s tock pe r cap i t are la t i v e to Eur ozone

2500000

Top r ece ive rs o f FDI in 20 08(Stock in millions of US $)

0.90

1000000

1500000

2000000

0.75

0.80

0.85

0

500000

Italy

zerland

China

Canada

Belgium

Spain

erlands

ermany

ngKong

UK

France

US

0.60

0.65

0.70

12

Source: World Investment Report 2009

Swit

Net

Ho

Source: World Investment Report 2009


14/57

The cr i s i s p r om p t s an ab ru p t ad ju st m en t

Rap id d ow nsizin g o f r esid en t ia l sect o r : ou t p u t , L ( m ain ly in

t e m p o r ar y co n t r act s)

Rip p le ef f ect s on em p loy m en t in o t h er sect or s

20

Un e m p l o y m e n t r a t e(In percent)

Secto r a l emp loym en t

12

16july 2008 sept 2009 dif %

Total 19.382.121 17.935.095 -1.447.026 (100)

Construction 2.361.177 1.752.157 -609.021 (42,1)

Industr 2.731.068 2.377.211 -353.857 24 5

(t otal num ber)

4

8

2005 2006 2007 2008 2009

Services 13.150.027 12.599.061 -550.966 (38,1)

Sources: Eurostat. Labor Force Survey.

Spain Euro area (16 countries)

13

Sources: Eurostat. Labor Force Survey.


15/57

Chan ges in sect o r a l and ex t e rn a l ba lances

soaring Savings

Government Deficit jumps, but 2.5 points of GDP are one-off

Current Account deficit has halved in 2009

Sector a l ba lan ces

(% of GDP)

1,9

6,5

2

4

6

8Public Sector Balance

Private Sector

-4,1-5,0

-10

-8

-6

-4

-2

%

-11,4-11,0-14

-12

2007 2008 2009

14Source: National Statistics Institute, Spain.


16/57

g g s



Fun d ing St r a tegy o f t he Kingd om o f Spa in

15


17/57

Po l i cy St r a tegy fo r Sus ta inab le Gr ow t h

Pr u d en t Macr o eco n om ic Scen ar i o 2 0 1 0 - 2 0 13

A r eem en t on Fisca l Con so l id at ion t o b r in t he def ici t

back t o 3 % in 2 0 1 3

St r u ct u r a l Ref or m s:

Structural Reforms in the goods markets

Public Pensions System

Labour Market

Banking sector Restructuring

16


18/57

The Gover nm ent s Macr oecono m ic scenar io

Th e ou t pu t g ap w i l l b e closed b y 2 0 1 3 , af t er p eak in g in 2 0 1 0

Ex t er n a l d em an d con t r ib u t ion t o GDP w i l l g r adu al l y w an e asd om est ic d em an d at her s st eam

Po t en t ia l g r ow t h w i l l r ecov er f r om a t r ou g h o f 0 .6 % in 2 0 1 0 t o1 .6 % in 2 0 1 3

GDP - 3 .6 - 0 .3 1 .8 2 .9 3 .1

Final Consumption Expenditure -2.4 0.3 1.7 2.2 2.1

2 0 1 1 2 0 1 2 2 0 1 3Macroeconom ic scena r i o 20 09 - 201 3 2 0 0 9 2 0 1 0( G r ow t h r a t e i n p e r ce n t )

- . - . . . .

Nat ion al Dem an d ( con t r ib u t ion t o GDP g r ow t h ) - 6 .4 - 1 .4 1 .4 2 .6 3 .0

Exports of Goods and Services -12.4 2.8 5.2 6.9 7.4

Imports of Goods and Services -18.7 -1.3 3.7 5.8 6.8

Ex t er n al dem an d ( con t r ibu t ion t o GDP g r ow t h ) 2 .8 1 .1 0 .4 0 .3 0 .1

17

Source: Annual update of the Stability Programme.


19/57

Fisca l conso l ida t ion st r a t egy

Su bst an t ia l r ed u ct ion in Sp en d in g an d m o der at e in cr ease

Al r ead y in 2 0 1 0 a 2 .2 % cu t in st ru ct u r a l def i ci t

GDP - 3 .6 -0 .3 1 .8 2 .9 3 .1

2 0 1 1 2 0 1 2 2 0 1 3( G r o w t h r a t e i n p er c en t )

Fisca l Ad jus tm en t Pa th 200 9 - 20 13 2 0 0 9 2 0 1 0

en er a ov er n m en t u get a an ce o - . - . - . - . - .

Gen er al Gov er n m en t Gr oss Deb t ( % of GDP) 55 .2 6 5 .9 7 1 .9 7 4 .3 74 .1


18


20/57

St a r t i ng and f i na l po in t s o f f i sca l conso l ida t ion

Tem por ar y m easu r es ( ch an ges in t ax co l lect ion , on e o f fin v est m en t f u n d s) accou n t f o r 2 .4 % p o in t s o f GDP in 2 0 0 9 s t ot a lde f i c i t

Tot al size o f f i sca l p o l i cy ad j ust m en t ( st ru ct u r a l t er m s) : 5 .7 % ofGDP

Fiscal po si t ion 2 0 0 9 2 0 1 3Gen er a l Gov er n m en t Balan ce ( 1 ) - 1 1 ,4 - 3

Cy cl ica l com pon en t ( 2 ) - 1 ,4 0

- -


, ,

Tem po r ar y m easu r es ( 4 ) - 2 ,5 0St r u ct u r a l Pr im ar y Balan ce ( 1 ) - ( 2 ) - ( 3 ) - ( 4 ) - 5 ,6 0 ,1

19


21/57

Fisca l rest r a in t m easur es

Rev en u es Ex p en d i t u r es

VAT 0 .7

Ex cise Tax es 0 .3

4 0 0 Tax Rebat e Ref o r m 0 .4

Sav in gs Tax Ref o r m 0 .1

SME Co r po r at e Tax Ref o r m - 0 .1

Gov er n m en t Ex pen d i t u r e - 0 .8

Add i t ion al cu t in 2 0 10 Ex pen d i t u r e - 0 .5

Cen t r a l Gov er n m en t Au st er i t y Plan 2 0 1 1 - 2 0 1 3 - 2 .6

New Measures*


eg on a an oca gov er n m en pen n g cu s - .

Restraint in wage outlays for all public administrations through:

10% replacement rate No new temporary hiring

Strong moderation in wages

20

Sizable cuts in investment, transfers and subsidies


22/57

Can w e im p lem en t t h i s?

, ,

q u al i t y o f ou r p u b l i c f in an ces, an d t h e su ccess o f ou r f iscald isc ip l ine .

f u r t h er r ed u ct ion s in t h e d ef ici t

N et L en d i n g ( + ) / Bo r r o w i n g ( - ) o f Gen er a l Go v er n m en t

-2.0

0.0

2.0

4.0 ,

-12.0

-10.0

-8.0

-6.0

- .

21

-14.0

1

995

1

996

1

997

1

998

1

999

2

000

2

001

2

002

2

003

2

004

2

005

2

006

2

007

2

008

2

009

20

10*

20

11*

20

12*

20

13*

* Annual update of the Stability Programm e.


23/57

Deb t dyn am ics

Even after the impact of strong stabilisation policies, Spain's Debtto GDP is significantly lower that the Eurozone average

125.0

2 0 0 0 - 2 0 1 090 2 0 1 0 F

Gr oss Deb t - t o - GDP ( % ) Gr oss Deb t - t o - GDP ( % )

75.0

87.5

100.0

112.5 EurozoneAverage : 84 .0%

65.9

70

80

FranceGermanySpain

12.5

25.0

37.5

50.0

.

55.2

39.740

50

0.0

Spain Ireland France Germany Italy UK USA

22Sources: European Commission, Annual update of the Stability Programme and International Monetary Fund.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


24/57

Lo w est i n t e r e st b u r d e n w i t h i n a f f o r d ab le l im i t s

13

Rat io o f in t e res ts to GDP o f Genera l Govern m ent

(% nom inal GDP, EDP)

7

9

1

3

5

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

*

2010

*

Spain Germany France Belgium Italy UK

23

Source: European Comm ission.

* European Economic Forecast Autum n 2009, European Comm ission.


25/57

St r u c tu r a l Refo r m s i n p r o d u ct m ar k et s

I m p r ov in g t h e in st i t u t ion al en v i r on m en t f o r b u sin ess: by

increasing general government discipline

Fo st er in g com p et i t i v en ess: by reducing the administrative

Fo st e r i n g m o d er n i zat i o n : promoting sectors that are at the baseof economic activity (R&D, innovation and training), improving

support or t eir integration into t e overa va ue c ain, anfacilitating the internationalization of businesses

Est im at ed im p act on GDP + 0 .3 2 % in Po t en t ia l GDP

24


26/57

Resid en t ia l Real Est a t e Sect or

Ph asin g ou t f i scal in cen t iv es f o r h ou sin g ow n er sh ip f r om2 0 11 ( d ed u ct ion o f m o r t gag e p ay m e n t s)

Rem o v in g b ar r ier s t o t he d ev elop m en t o f t he r en t al m ar ket :

Sam e f isca l t r eat m e nt t h an ow n er sh ip r ea on o

Leg al ch an ges t o st r en gt h en cer t ain t y f or lan d lo r ds

Tax I n cen t iv es f o r r ef u rb ish m en t p r ov id e som e su pp o r t

25


27/57

Pr even t i ve f i nancial sup por t m easur esLiquidity

FAAF

Bank

guarant

Credit

ICO

Reorg

enha

ncement

fundi

ng

Highqualitycollateral 19.3bn Defacto,phasedout.ees

(

2008-2009

48bn,around150bonds Extended30June2010.Butmarketsopenstim

ulus

line

s

Secondtierfunding Risksharing 20bnsince2007 nizat

ion

ROB

M&Abankingarmofsupervisor Independentfundingandmanagement 9bncapital-27bnguaranteedfundingauthoriz

Capita lenhancement

an dCredi t

s t i m u l u sLiqu id i t y enhancem en t

)

reo rgan isa t ion

26


28/57

The f i n ancial syst em r em a ins r esi l i en t

Main source of perceived vulnerability regards lossesstemming rom en ing to rea estate eve opers

Bank of Spain stress test: Opera t ing incom e ove r 3

of lending to real estate developers.

Ex t rem e assum p t i ons of stress test: PD o f 4 0% (3

mes e pea o an o g yimplausible)

27


29/57

FROB: a too l f o r r est r uc tu r ing t he bank ing sect o r

Rat ion ale f or t h e in i t ia t iv e

- Ov er com in g f r agm en t at ion in t h esav in gs an d b an k s sect or .

Governance

- I n d ep en d en t m a na ge m e nt .

- Ach iev em en t o f econ om ies o f scale t od igest low in t er est m ar g in s an d r eale st a t e i m p a ct .

- .

- Auth or ized by DG Com pet i t ion .

A sset Op er a t i on s

- Su p po r t t o i nt eg r at i on p r ocesses su b j ect

Fund ing

- Pu bl ic- pr iv at e m i x o f cap it al ( 9 b n ) .t o con d i t ion s set by t h e ban k in gsupe rv i so r .

- I nst r u m en t ed t h r ou gh con v er t ib lep r efer en ce sh ar es w i t h m ar ket -o r ien ted

- Agen cy - l i k e f u n d in g p r og r am m ecoor d in at ed w i t h t h e sov er eignp r o g r a m m e .

r e m u n e r a t i o n .

28


30/57

Pens ion Sys t em Refor m

Pr o p o sed M ea su r es:

A p rog ressi ve inc rease in t he re t i r em en t age ( t o 67

Strengthening relationship between contributions and benefits

A more flexible relationshi between com lementar socialsecurity and the public system

Possible adjustment of other parameters of the current system

Ex p ect ed Resu l t s: Su st a in ab i l i t y o f t h e p en sion sy st em

29


31/57

Labour Mar k e t Re fo rm

Five m a in g u ide l i nes:

a y n emp oymen , y re uc ng mar e segmen a on

Reform of Collective Bargaining system

Promotion of the integration of women in the labour market

Worker intermediation and greater control of temporary

occupational disability claims

30


32/57

High l i gh ts



u y

31


33/57

High l i gh t s o f Fun d ing St r a tegy

Significant reduct i on in ne t f un d ing requirements and

persistence of sound risk metrics

,

as guiding principles for the execution of our auction program

As for syndications, timing is dictated by the limit size of theline to be replaced (16.5 bn for longer tenors) and market

conditions.

- - ,

inflation linker still a project

Maintain our st ab le and d ive rs i f i ed in vest o r base

32


34/57

The fun d ing s t r a tegy

Tesoro Fun d in g in 20 10

1 : Fu n d in g r eq u i r em en t = Net I ssu an ce 7 6 .8

2 : Redemptions bonds 2010 35.4

3 : Net issuance medium long term 61.64 = 2 + 3 Gr oss I ssu an ce Med iu m - Lon g Ter m 9 7 ,0

5 : Net Increase T-Bills 15.26 : Assumption of RTVE debt 1.5

= .

8 : For ecast Ou t st an d in g Cen t r al Gov er n m en t Deb t at en d 2 0 1 0 5 5 3 .5Source: General Stat e Budgets Bill 2010

33


35/57

Fun d ing p r og ram m e in pe rspect i ve

Cu t in Net I ssu an ce: low er cash d ef i ci t an d n o ex cep t ion a lin cr ease in n et f in an cia l asset s

116.7120

140

2009 2010

Fund ing P rog ram m e. 201 0 vs . 200 9(Net issuance in billion Euro)

82.376.8

61.660

80

100

.

15.2

0

20

40

Total Net Issuance Letras del Tesoro net

issues

Medium & long term

net issues*

(*) Includes foreign currency issues.

34Source: Direccin General del Tesoro y Poltica Financiera.


36/57

Sh o r t - t e r m f u n d i n g

Net issu an ce in 2 0 0 9 in line with initial announcement: 34.4 bn.Gross issuance breakdown:

3-month Letras: 19.7 bn

6-month Letras: 31.6 bn

-

I n nov at ion s in 2 01 0:

Calendar change: 3- and 6-month Letras auction 4th

Tuesday 18-month T-bills relaunched: auction 3rd Tuesday

35


37/57

Med iu m - an d lo ng - t e r m f u n d in g

Gr o ss i ssu a n ce: 2009 overshooting (ca. 25 bn ) due to higher than

expected impact of the crisis Au ct ion p roced ur es u nch an ged : Quarterly calendar + potential off-

the-run lines announced Friday prior to the auction

Lim i t size p er l in e: increased to 16.5 bn for longer lines

Bo no s d el Est ad o:

New 5-year benchmark in March

Current 3-year benchmark B 2.30% 04/2013 issued until 15 bn

g ac on es e st a o:

New 10 year O 4.00% 04/2020 (5 bn ) successfully syndicated inJanuary

36

Next syndication a 15 year line, to replace the matured O 4.80% Jan-2024), expected for February depending on market conditions


38/57

Diver si f i ca t ion o f fu nd ing sou r ces

Recen t f or e ig n cu r r en cy issu an ce:

Eurobond 2.75% March 2012 ($ 1.0 billion)

. .

Tesoro Pblico is open to additional foreign currency issuance

- - ,( 3 .0 b i l l ion ) . Possible retapping in 2010

Pro jec ts :

European inflation-linked issues (HICP-ex tobacco) Schuldschein loans

37


39/57

Main feat u r es o f Tr easu r y fu nd ing st r a tegy

500

600

475

554Span ish deb t po r t f o l i o

( bill ion)

319 312

300

400

307

358

200

0

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

(f)

1 1 1 1 1 2 2 2 2 2 2 2 2 2 2

2010

Foreign Currency Other Letras Bonos y Obligaciones38Source: Direccin General del Tesoro y Poltica Financiera.


40/57

Recen t w id en in g m ig h t b e an o p p o r t u n i t y

125

150

Spr ead o f th e Span ish 10 -year b ond v s . m a in Eur opean peers(in bps)

50

75

100

0

25

-75

-50

-

7 7 7 7 8 8 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 9 9 0 0

Sep-0

Oc

t-

Nov-

Dec-

Jan-

Fe

b-

Mar-

Apr-

0

May-

Jun-

Ju

l-

Aug-0

Sep-0

Oc

t-

Nov-

Dec-

Jan-

Fe

b-

Mar-

Apr-

0

May-

Jun-

Ju

l-

Aug-0

Sep-0

Oc

t-

Nov-

Dec-

Jan-1

Fe

b-1

Germany Italy France Belgium Netherlands39Source: Bloomberg.


41/57

Cheapen in g concen t r a ted in t he f r on t end

p r ea o t e pan s - y ear on v s. m a n u r opean p eer s(in bps)

125

150

50

75

100

-

0

25

-75

-50

7 7 7 7 8 8 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 9 9 10

10

40Source: Bloomberg.

Sep-

Oc

t-

Nov-

Dec-

Jan-

Fe

b-

Mar-

Apr-

May-

Jun-

Ju

l-

Aug-

Sep-

Oc

t-

Nov-

Dec-

Jan-

Fe

b-

Mar-

Apr-

May-

Jun-

Ju

l-

Aug-

Sep-

Oc

t-

Nov-

Dec-

Jan-

Fe

b-

Germany Italy France Belgium Netherlands


42/57

An a t r a ct i v e m ar k et t o i n v est i n

Attractive prices Liquid instruments

Solid and efficientinfrastructure

Diversified investorbase

41


43/57

I n cr e ase i n m ar k et l iq u i d i t y

18

20

3.25% 5.40% 4.40%

6.00%4.10%On-the-run bonds

verage ou s an ng s ze: . n

Target for average outstanding 10 years: 15 bn

12

14

4.20%.

4.25%3.80%

5.35%5.00%

6.15%

.

4.75%

. .

5.75%

4.90%

.

4.80%

2.75%

4.60%

4.3.30%

2.30%

6

8

4.70%4.00%

0

2

-10

11

-11

11

12

-12

12

-13

13

-13

-14

-14

14

-15

-16

-17

-17

-18

-19

19

20

-24

-29

-32

-37

-40

-41


Jul

Apr

Jul

Oct

Apr

Jul

Oct

Jan

Apr

Jul

Jan

Jul

Oct

Jan

Jan

Jan

Jul

Jul

Jul

Oct

Apr

Jan

Jan

Jul

Jan

Jul

Jul


44/57

Low Debt Re f inan cing Risk

45.000

50.000

(Million Euros)

Redem pt ion p r o f i l e o f Bonos & Ob l igaciones

35.000

40.000

20.000

25.000

.

5.000

10.000

15.000

0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020-

2023

2024 2029 2032 2037 2040 2041

Source: Direccin General del Tesoro y Poltica Financiera. 43


45/57

Low Debt Re f inan cing Risk

Central Government Debt refinancing risk(in % of the total portfolio)

42

40

50

24

7

182220

182121

10

20(%)

0

1 year or less 1 to 3 years 3 to 5 years

31.12.1995 31.12.1999 31.01.2010

Source: Direccin General del Tesoro y Poltica Financiera.

44


46/57

Thank s t o re la t i ve ly h igh du r a t ion and ave rage l i f et o m at u r i t y

D ura t i on & Ave rage Li f e t o Ma tu r i t y o f t he Po r t f o l i o

(Letras, Bonos and Obligaciones)(in years)8.0

4.77

.

4.79

.

5.526.0

4.164.0

France 6,24

Average l i fe

0.0

2.0 Netherlands 6,88

Belgium 5,94Italy 7,07


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Duration Average life


47/57

w hi le ach iev ing low er Fun d ing Cost s

Aver age Fun d in g Costs

(in percent)

5.5

6.0

4.32

4.0

4.5

5.0

3.49

2.27

3.81

2.5

3.0

3.5

1.0

1.5

2.0


Average cost of Debt outstanding Average cost at issuance


48/57

Rel i ance on f o re ign fu nd ing re lat i vel y m odera t e

100Ex t e rna l pub l i c secto r deb t i n 200 9(% of GDP)

50

60

70

80

10

20

30

40

0

Greece

Belgium

Italy

Austria

France

Ireland

erlands

ermany

Finland

Spain

United

States

rgentina

United

ingdom

47

Net

Source: OECD.


49/57

Ban k s f i n an cin g o f g o v er n m en t d eb t i n l in e w i t hEur ozone av erage

25

H ol d i n g s o f g o v e r n m e n t d e b t N o v e m b e r 2 0 0 9(% of bank assets)

15

20

5

10

0

ovakia

elgium

reece

Italy

Spain

rance

oarea

Ireland

rlands

rmany

ustria

ortugal

inland

Sl

Eu

Neth G

P

48Source: Citi.


50/57

Span ish Bank s fu nd ing f r om ECB arou ndEur ozone aver age

10%

Recour se to ECB fu nd in g(% of total bank assets)

6%

8%

2%

4%

0%

NL

GE

IRL IT

ESP

PO

GR

AU FI

FR

BE

49

- -

Source: Deutsche Bank.


51/57

St ab le and d iv e rs i f ied inv est o r b ase

Gove rnm en t Bonds by H o lde r(Term investm ent, % of total portfolio)

90%

100%Spanish official

institutions

60%

70%

80% Non residents

Households &

43.94%

33.37%

40%

50%Non financ.

Pension & Mutual

Funds

10%

20%

Insurance

Companies

Credit Institutions


0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


52/57


Let ras de l Tesoro by Ho ld er

(Term investm ent, % of total portfolio)100%Spanish Official

70%

80% Non-Residents

40%

50%

financ.

Pension and Mutual

Funds48.97

10%

20%

30% Insurance companies

Credit Institutions

35.57%


0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


53/57


(Term investm ent, % of total portfolio)

30%

20%

10%

15%

0%

5%

France Japan Germany Italy BENELUX Rest of EU Asia, Afica America Rest of


and others Europe

2006 2007 2008 2009


54/57

Top Pr im ary Dea ler s in 2 00 9

Bonos y Ob l igac iones

Barc lays

Calyon

San tander

oc n r a e

Le t ras

BBVASantander

Socit Gnr a le

53


55/57

Th a n k y o u f o r y o u r a t t en t i on

Soledad Nez Directora General del Tesoro y Poltica [email protected]

onza o arc a n r s u rec or enera e es n y nanc ac n e a eu a [email protected]

Jos Ramn [email protected]

Rosa [email protected]

Leandro [email protected]

Pablo de [email protected]

Ignacio Vicente

For m o re i n fo rm a t ion p lease con tac t :Phone: 34 91 209 95 29/30/31/32 - Fax:34 91 209 97 10

54

v cen e esoro.me .es

Roco [email protected]

eu ers:Bloomberg: TESO

Internet: www.tesoro.es


56/57

Ann ex: t h e Soc ia l Secu r i t y Reser ve Fu n d

70 (Billon )

Socia l Secur i t y Reserve Fund asset h o ld in gs

40

50

20

30

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

55

The Social Security Reserve Fund amounted in December 2009 to approximately 5.7%

( 60bn) of GDP.


57/57

Ann ex: Ley de Econ om a Sost en ib le & Gener a lAgr eem ent on Fisca l Sus t a inab i l i t y

Compet i t i veness

- So ci et y o f I n fo rm a t ion .-

Tax m easu r es

- Ren tal m ar ket : eq ual t reat m en t w i t ho w n e r s h i p .

, .- I n t e r n at i o n al isa t io n o f SM E s.- Educat ion .- Red u ct i on o f ad m i n ist r a t iv e b u r den .

- El im in at ion o f t ax r ebat es: i .e . r el ie fon m or t gage pay m en t s, 4 0 0 r ebat eon in com e t ax .- Cor p or at e I n com e Tax r eb at es

r elat ed t o R& D an d t o t h ee n v i r o n m e n t .

Env i ronmen tFi scal Sus ta inab il i t y

- En e r g y Po l ic y .

- CO2 Em ission - reduc t i on .- Ef f icien cy o f t r an spor t an din f ras t ruc tu re .

- p an s r eg on s o or m u a e

qu ar t er ly r epor ts t o t he Fiscal Po l icyCounci l .- Cor r ect ion an d su rv ei l lan ce o f f isca lde f ic i t s .

56

- e r a o o r eac m o6 0 % by 2 0 1 3 .

why spain is not greece

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