Strong public finances. Good economic growth prospects. Membership of the European Economic and Monetary Union (EMU). Overvalued housing market vulnerable to correction. Long-term economic growth prospects weakened by relative worsening in export competitiveness. Persistent inflation differential with the Eurozone. The ratings on the Kingdom of Spain reflect its robust fiscal consolidation in recent years, which has been supported by tight expenditure control, coupled with declining interest payments, and strong revenues. The general government has for the most part recorded small deficits in recent years. Following buoyant revenue growth at the central government level and increasing social security surpluses, the general government is expected to post modest surpluses in the medium term. Moreover, the debt-to-GDP ratio is expected to continue on
