Strong public finances. Good economic growth prospects. Membership of the European Economic and Monetary Union (EMU). Comparatively low levels of prosperity. Slow productivity gains Persistent inflation differential with the Eurozone. Spain has seen a remarkable fiscal consolidation in the past few years. Tight expenditure control, coupled with declining interest payments and strong revenues, led the general government balance to achieve a surplus of 0.3% of GDP in 2003, compared with a 1.2% deficit in 1999. The 2004 general government balance is forecast to show a deficit of 0.7% of GDP, largely reflecting one-off expenditures, but is expected to return to a broadly balanced position from 2005 onward. In parallel, the debt-to-GDP ratio has declined rapidly to 49.6% in 2004, from
