Spain has seen a remarkable fiscal consolidation in the past few years. Tight expenditure control, coupled with declining interest payments and strong revenues, has 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 slight deficit of 0.6% of GDP, but to return to small surpluses from 2005 onward. In parallel, the debt-to-GDP ratio has declined rapidly to 49% in 2004, from 63% in 1999. Reforms to labor and product markets have increased the resilience of the Spanish economy in the past few years, leading to a robust economic performance. As demonstrated by the mild slowdown in 2001-2003,
