Strong public finances Good economic growth prospects Membership of the European Economic and Monetary Union (EMU) High level of private sector indebtedness Unbalanced, labor-intensive growth resulting in low productivity increases Economic growth prospects weakened by relative deterioration in export competitiveness The ratings reflect the Kingdom of Spain's strong fiscal position, which has been supported by expenditure control, declining interest payments, and healthy revenues. Nevertheless, we expect the general government surplus of recent years to moderate in the medium term as buoyant revenue growth weakens along with the economy. At the same time, social security surpluses, and the largely balanced position of Spanish local and regional governments, will support public finances. Moreover, the debt-to-GDP ratio is likely to continue its downward
