Why Spain is Not Greece
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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
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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
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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
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High l i gh ts
The long g r ow t h cyc le and t he cr i si s
Fisca l conso l ida t ion and s t r uc t u r a l r e fo r m
3
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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.
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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.
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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
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.
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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
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.
-
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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
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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
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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.
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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.
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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
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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.
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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.
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g g s
The long g r ow t h cyc le and t he cr i si s
Fisca l conso l ida t ion and s t r uc t u r a l r e fo r m
Fun d ing St r a tegy o f t he Kingd om o f Spa in
15
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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
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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.
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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
Source: Annual update of the Stability Programme.
18
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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
- -
Source: Annual update of the Stability Programme.
, ,
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
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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*
Source: Annual update of the Stability Programme.
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
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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.
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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High l i gh ts
The long g r ow t h cyc le and t he cr i si s
Fisca l conso l ida t ion and s t r uc t u r a l r e fo r m
u y
31
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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
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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
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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.
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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
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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
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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
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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.
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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.
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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
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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
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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
42Source: Direccin General del Tesoro y Poltica Financiera.
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
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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
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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
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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
45Source: Direccin General del Tesoro y Poltica Financiera.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Duration Average life
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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
46Source: Direccin General del Tesoro y Poltica Financiera.
Average cost of Debt outstanding Average cost at issuance
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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.
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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.
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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.
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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
50Source: Direccin General del Tesoro y Poltica Financiera.
0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
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St ab le and d iv e rs i f ied inv est o r b ase
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%
51Source: Direccin General del Tesoro y Poltica Financiera.
0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
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St ab le and d iv e rs i f ied inv est o r b ase
(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
52Source: Direccin General del Tesoro y Poltica Financiera.
and others Europe
2006 2007 2008 2009
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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
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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
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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.
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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 .