Spain Economic Policy and 2010 Funding Strategy

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Spain Economic Policy. Presentation by the spanish secretary of state for the economy, José Manuel Campa, to the Financial Times (London, February the 8th 2010)

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Spain Economic Policy and 2010 Funding Strategy

  1. 1. Kingdom of Spain Economic Policy and 2010 Funding Strategy Secretary of State for the Economy February 2010 y
  2. 2. • Highlights • The long growth cycle and the crisis • Fi Fiscal consolidation and structural reform l lid ti d t t l f • Funding Strategy of the Kingdom of Spain g gy g p ~2009~ 1
  3. 3. Highlights • Long growth cycle previous to the international crisis • Important challenges ahead: Unemployment and deficit, consequence of the crisis but also symptoms of underlying structural shortcomings • The Spanish Government is determined to act: p • Fiscal consolidation: A cut of 5.7% of GDP in structural primary deficit in 2010-2013 •SStructural reforms to boost potential GDP: Sustainable l f b i l GDP S i bl Economy, Bank Reorganisation, Pensions, Labour Market • Strengths: Sound financial system, low Debt/GDP, institutional ability for reform 2
  4. 4. • Highlights • The long growth cycle and the crisis • Fiscal consolidation and structural reform • Funding Strategy of the Kingdom of Spain 3
  5. 5. 1994-2008: Convergence and Debt reduction • GDP per capita has leapt forward, exceeding the average of EU-25 • Fiscal rigour during the good times allowed debt to GDP to be more than halved GDP Debt to GDP (Year on year real growth rates) (% nominal GDP) 80% 6% Euro-area Spain 4% 70% 2% 60% Euro-area 0% 50% -2% Spain 40% -4% -6% 30% 2000 0 2001 2002 2 2003 3 2004 4 2005 5 2006 6 2007 7 2008 8 2009 9 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Eurostat. Source: Eurostat. 4
  6. 6. Investment binge: housing and beyond • What has fuelled domestic demand is a soaring investment rate, with the national savings rate staying close to Eurozone average • The housing boom is part of the story, but not the whole story Savings rate Investment rate vs. Savings rate ( (% nominal GDP) ) (% nominal GDP) o a G ) 34 30 25 30 20 26 15 22 10 18 99 00 01 02 03 04 05 06 07 08 09 199 200 200 200 200 200 200 200 200 200 200 Belgium Germany Spain France Italy 2000 2005 2009* Savings rate Investment rate Source: Eurostat. Source: Eurostat. * 2009Q3 5
  7. 7. Investment binge: housing and beyond • The residential real estate sector grabbed a non-sustainable share of GDP and employment… Construction Sector: Gross Value Added and Employment (% Total Value Added and of Total Employment) 14 13 12 11 10 9 8 7 6 995 996 997 998 999 000 001 002 003 004 005 006 007 008 009 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 Full-time equivalent employees Gross Value Added Source: National Statistics Institute, Spain. 6
  8. 8. Investment binge: housing and beyond • …but Spain has also invested heavily in equipment, infrastructure and Research and Development Investment in equipment (average growth, 1995-2008 in percent) Public Investment 5.0 (% of GDP) 10 8 4.0 40 6 3.0 4 2.0 2 1.0 0 0.0 UK UK UK E U -15 E U -15 E U -15 Italy G erm any G erm any G erm any N etherlan N etherlan N etherlan D enm ark D enm ark D enm ark S pain S pain S pain A ustria Finland France France France 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 k k k y y y EU-27 EU 27 GERMANY FRANCE ITALY UK SPAIN nds nds nds Source: Eurostat. 7
  9. 9. Intensive in employment • Residential construction attracted low skilled labour, dragging productivity lower • Labour supply matched this demand with the help of immigration flows Active population Labor productivity (Growth rates from 2005Q1 to 2009Q3) ( e at e (Relative to EU-27, PPP) U , ) 12% 107 10% 106 8% 105 104 6% 103 4% 102 2% 101 0% 100 Germany y Italy y Spain n France e Belgium m m Kingdom 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 United Source: Eurostat. Labor Force Survey. Source: Eurostat. Labor Force Survey. 8
  10. 10. Cost competitiveness • Loss of competitiveness has been moderate in the tradable sector • Nominal divergence stems from non-tradables (where the bulk of the adjustment is taking place) Unit labour cost index Manufacturing ULC index (Relative to eurozone 1999=100) (Relative to eurozone 1999=100) 125 140 120 130 115 120 110 110 105 100 100 90 95 80 999 000 001 002 003 004 005 006 007 008 009 999 000 001 002 003 004 005 006 007 008 009 19 20 20 20 20 20 20 20 20 20 20 19 20 20 20 20 20 20 20 20 20 20 Spain Italy Germany France Spain Italy Germany France Source: Eurostat. Source: Eurostat 9
  11. 11. Exports show underlying improvement in supply • In spite of brisk domestic demand and waning price competitiveness… • …Spain's market shares have outperformed most of peers Share in world merchandise exports Share in world exports of services* (Index 2000=100) 150 (Index 2000=100) 120 110 125 100 90 100 80 75 70 60 50 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 Spain Germany France United States Spain Germany France United States Source: International Monetary Fund. Source: World Trade Organisation. * Services other than transportation and travel. 10
  12. 12. Services Exports’ market share has increased significantly • Among others, services related to architecture, construction and engineering have more than doubled market share Share of service exports in the OCDE, by service 10 2000 2007 8 6 4 2 0 otal  rism ment tion Entertainm ent Insurance cial Transportation and Professional ons services to and engineering al, es n, To Financ Communicatio construction service Otherr Architectura Royalties a patentss Governm Tour Informat services Source: OECD. 11
  13. 13. FDI flows have increased significantly • Outward FDI stock per capita has grown faster in Spain than in the Eurozone • Remains a major destination of international investment Outward FDI stock per capita Top receivers of FDI in 2008 relative to Eurozone (Stock in millions of US $) 2500000 0.90 2000000 0.85 0.80 1500000 0.75 1000000 0.70 500000 0.65 0 Germany UK US China Canada Belgium Hong Kong France Italy herlands Spain tzerland 0.60 2002 2003 2004 2005 2006 2007 2008 Neth G Swit Source: World Investment Report 2009 Source: World Investment Report 2009 12
  14. 14. The crisis prompts an abrupt adjustment • Rapid downsizing of residential sector: output, L (mainly in temporary contracts) • Ripple effects on employment in other sectors Unemployment rate 20 (In percent) Sectoral employment 16 (total number) july 2008 sept 2009 dif % Total 19.382.121 17.935.095 -1.447.026 (100) 12 Construction 2.361.177 1.752.157 -609.021 (42,1) Industry 2.731.068 2.377.211 -353.857 353.857 (24,5) 8 Services 13.150.027 12.599.061 -550.966 (38,1) Sources: Eurostat. Labor Force Survey. 4 2005 2006 2007 2008 2009 Spain Euro area (16 countries) Sources: Eurostat. Labor Force Survey. 13
  15. 15. Changes in sectoral and external balances • Large swing in private sector balance: plummeting Investment and soaring Savings • Government Deficit jumps, but 2.5 points of GDP are one-off • Current Account deficit has halved in 2009 Sectoral balances (% of GDP) Public Sector Balance 8 6,5 6 Private Sector 4 1,9 2 % 0 -2 -4 -6 -4,1 -5,0 -8 -10 -12 -11,0 -11,4 -14 2007 2008 2009 Source: National Statistics Institute, Spain. 14
  16. 16. • Hi hli ht Highlights • The long growth cycle and the crisis • Fiscal consolidation and structural reform • Funding Strategy of the Kingdom of Spain 15
  17. 17. Policy Strategy for Sustainable Growth • Prudent Macroeconomic Scenario 2010-2013 • Agreement on Fiscal Consolidation to bring the deficit g g back to 3% in 2013 • Structural Reforms: • Structural Reforms in the goods markets • Public Pensions System • Labour Market • Banking sector Restructuring 16
  18. 18. The Government’s Macroeconomic scenario • The output gap will be closed by 2013, after peaking in 2010 • External demand contribution to GDP will gradually wane as do est c de a d gat e s stea domestic demand gathers steam • Potential growth will recover from a trough of 0.6% in 2010 to 1.6% in 2013 Macroeconomic scenario 2009-2013 2009 2010 2011 2012 2013 (Growth rate in percent) GDP -3.6 -0.3 1.8 2.9 3.1 Final Consumption Expenditure -2.4 0.3 1.7 2.2 2.1 Gross Fixed Capital Formation -15.7 15 7 -6.5 65 0.3 03 4.2 42 5.9 59 National Demand (contribution to GDP growth) -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 External demand (contribution to GDP growth) 2.8 1.1 0.4 0.3 0.1 Source: Annual update of the Stability Programme. 17
  19. 19. Fiscal consolidation strategy • Substantial reduction in Spending and moderate increase in Revenues • Already in 2010 a 2.2% cut in structural deficit Fiscal Adjustment Path 2009-2013 2009 2010 2011 2012 2013 (Growth rate in percent) GDP -3.6 -0.3 1.8 2.9 3.1 General G G l Government Budget Balance (% of GDP) tB d tB l f -11.4 11 4 -9.8 98 -7.5 75 -5.3 53 -3.0 30 General Government Gross Debt (% of GDP) 55.2 65.9 71.9 74.3 74.1 Source: Annual update of the Stability Programme. 18
  20. 20. Starting and final points of fiscal consolidation • Temporary measures (changes in tax collection, one off investment funds) account for 2.4% points of GDP in 2009’s total deficit • Total size of fiscal policy adjustment (structural terms): 5.7% of GDP Fiscal position 2009 2013 General Government Balance (1) -11,4 -3 Cyclical component (2) -1,4 0 Interest payments (3) -1 9 1,9 -3 1 3,1 Temporary measures (4) -2,5 0 Structural Primary Balance (1)-(2)-(3)-(4) -5,6 0,1 Source: Annual update of the Stability Programme. 19
  21. 21. Fiscal restraint measures Measures adopted and announced (% of GDP) Revenues Expenditures VAT 0.7 Excise Taxes 0.3 400€ Tax Rebate Reform 0.4 2010 Budget Savings Tax Reform 0.1 SME Corporate Tax Reform -0.1 Government Expenditure -0.8 Additional cut in 2010 Expenditure -0.5 New Measures* Central Government Austerity Plan 2011-2013 -2.6 Regional and local government Spending cuts R i l dl l tS di t -0.5 05 Source: Annual update of the Stability Programme. • Restraint in wage outlays for all public administrations through: • 10% replacement rate • No new temporary hiring • Strong moderation in wages • Sizable cuts in investment, transfers and subsidies 20
  22. 22. Can we implement this? • We have done it in the past which proves our compromise the past, compromise, quality of our public finances, and the success of our fiscal discipline. • Shared commitment to fiscal discipline and margin to secure further reductions in the deficit Net Lending (+)/Borrowing (-) of General Government 4.0 (% nominal GDP EDP) GDP, 2.0 0.0 -2.0 40 -4.0 -6.0 -8.0 -10.0 -12.0 -14.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011* 2012* 2013* * Annual update of the Stability Programme. 21
  23. 23. Debt dynamics • Even after the impact of strong stabilisation policies, Spain's Debt to GDP is significantly lower that the Eurozone average Gross Debt-to-GDP (%) Gross Debt-to-GDP (%) 2000-2010 2010F 90 125.0 France 80 Germany 112.5 Eurozone Spain 100.0 Average: 84.0% 70 87.5 75.0 60 65 9 65.9 62.5 62 5 50.0 50 55.2 37.5 40 25.0 39.7 12.5 30 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Spain Ireland France Germany Italy UK USA Sources: European Commission, Annual update of the Stability Programme and International Monetary Fund. 22
  24. 24. Lowest interest burden within affordable limits Ratio of interests to GDP of General Government (% nominal GDP, EDP) 13 11 9 7 5 3 1 * * 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 Spain Germany France Belgium Italy UK Source: European Commission. * European Economic Forecast Autumn 2009, European Commission. 23
  25. 25. Structural Reforms in product markets • Improving the institutional environment for business: by modernizing and simplifying government activities as well as increasing general government discipline • Fostering competitiveness: by reducing the administrative burden of creating companies and reducing red tape • Fostering modernization: promoting sectors that are at the base of economic activity (R&D, innovation and training), improving support f for their integration into the overall value chain, and h h ll l h d facilitating the internationalization of businesses Estimated impact on GDP + 0.32% in Potential GDP 24
  26. 26. Residential Real Estate Sector • Phasing out fiscal incentives for housing ownership from 2011 (deduction of mortgage payments) • Removing barriers to the development of the rental market: • Same fiscal treatment than ownership • C Creation of REITS ti f • Legal changes to strengthen certainty for landlords • Tax Incentives for refurbishment provide some support p pp 25
  27. 27. 26 Preventive financial support measures reorganisation enhancement Capital and stimulus Credit Liquidity enhancement 9 b n € c Ea xp ti I et n na d M dl e & e- p A d e4 2 H n8 b 37 D i d a 0S e g e2 b nb e h n0 n k Jn c f t€ iq uo a b R , n€ n c u fn i g ed t 1 a us a g o 9 l n€ k r a 2u t , . i do r 0a i 3 it s u m 1r e p y m m O O R B R A A B n n iC g 2 l0 0 8 2 0 0 9 n u o n o a a g e u n n a ia a d g e e k in C F F F z e s u u d ni h s u e n h n n q d ( - ) r n a r e e e y t t L s s iI c f i i r t t i t l i t i 0a r h b gn a d on .n a c c r t f€ f s o ae i 1 Bu e l nn 5 s ue n d l d2 g 0 u td a 0 pi o t m0 b e mf n u e a7 o r au g t r nn v rn . a ad d il k gs s ei e o tn m r sg e n oa t pu et nh o r i z e
  28. 28. The financial system remains resilient • Main source of perceived vulnerability regards losses stemming from lending to real estate developers i f l di l d l • Bank of Spain stress test: Operating income over 3 years is able to absorb losses of 40% of the portfolio of lending to real estate developers. • Extreme assumptions of stress test: PD of 40%(3 times th peak of 1993) and LGD of 100 % (hi hl ti the k f d f (highly implausible) 27
  29. 29. FROB: a tool for restructuring the banking sector Rationale for the initiative Governance - Overcoming fragmentation in the - Independent management. savings and banks sector. - Strong accountability to Parliament Parliament. - Achievement of economies of scale to digest low interest margins and real - Authorized by DG Competition. estate impact. Asset Operations Funding - Support to integration processes subject - Public-private mix of capital (9 bn€). to conditions set by the banking supervisor. - Agency-like funding programme coordinated with the sovereign - Instrumented through convertible programme. preference shares with market-oriented remuneration. 28
  30. 30. Pension System Reform Proposed Measures: • A progressive increase in the retirement age (to 67 years) • Strengthening relationship between contributions and benefits • A more flexible relationship between complementary social p p y security and the public system • Possible adjustment of other parameters of the current system Expected Results: Sustainability of the pension system 29
  31. 31. Labour Market Reform • Five main guidelines: • St bilit in employment, by reducing market segmentation Stability i l t b d i k t t ti • Reform of Collective Bargaining system • Incentives for young workers’ employment and education workers • Promotion of the integration of women in the labour market • Worker intermediation and greater control of temporary occupational disability claims 30
  32. 32. • Highlights • The long growth cycle and the crisis • Fiscal consolidation and structural reform • Funding Strategy of the Kingdom of Spain 31
  33. 33. Highlights of Funding Strategy • Significant reduction in net funding requirements and persistence of sound risk metrics • Liquidity transparency and predictability will continue Liquidity, as guiding principles for the execution of our auction program • As for syndications, timing is dictated by the limit size of the line to be replaced (16.5 bn for longer tenors) and market conditions. • Innovations for 2010: 18 month T bills reappear Euro 18-month T-bills reappear, inflation linker still a project • Maintain our stable and diversified investor base 32
  34. 34. The funding strategy Tesoro Funding in 2010 (Billion euro) 1: Funding requirement = Net Issuance 76.8 2: Redemptions bonds 2010 35.4 3: Net issuance medium long term 61.6 4 = 2 + 3 Gross Issuance Medium-Long Term 97,0 5: Net Increase T-Bills 15.2 6: Assumption of RTVE debt 1.5 7 = 3 + 5 + 6: Net change outstanding debt 78.3 8: Forecast Outstanding Central Government Debt at end 2010 553.5 Source: General State Budgets Bill 2010 33
  35. 35. Funding programme in perspective • Cut in Net Issuance: lower cash deficit and no exceptional increase in net financial assets Funding Programme. 2010 vs. 2009 140 (Net issuance in billion Euro) 120 116.7 2009 2010 100 82.3 76.8 80 61.6 60 40 34.4 34 4 20 15.2 0 Total N t I T t l Net Issuance Letras del Tesoro net M di L t d lT t Medium & long term l t issues net issues* (*) Includes foreign currency issues. Source: Dirección General del Tesoro y Política Financiera. 34
  36. 36. Short-term funding • Net issuance in 2009 in line with initial announcement: 34.4 bn€. Gross issuance breakdown: • 3-month Letras: 19.7 bn€ • 6-month Letras: 31.6 bn€ • 12-month Letras: 58.0 bn€ 12 month • Innovations in 2010: • Calendar change: 3- and 6-month Letras auction 4th Tuesday • 18-month T-bills relaunched: auction 3rd Tuesday 35
  37. 37. Medium- and long-term funding • Gross issuance: 2009 overshooting (ca. 25 bn €) due to higher than expected impact of the crisis • Auction procedures unchanged: Quarterly calendar + potential off- the-run lines announced Friday prior to the auction • Limit size per line: increased to 16.5 bn € for longer lines • Bonos del Estado: • New 5-year benchmark in March • Current 3-year benchmark B 2.30% 04/2013 issued until 15 bn € • Obli Obligaciones d l E t d i del Estado: • New 10 year O 4.00% 04/2020 (5 bn €) successfully syndicated in January • Next syndication a 15 year line, to replace the matured O 4.80% Jan- 2024), expected for February depending on market conditions 36
  38. 38. Diversification of funding sources • Recent foreign currency issuance: • Eurobond 2.75% March 2012 ($ 1.0 billion) • Eurobond 2 00% October 2012 ($ 2 5 billion) 2.00% 2.5 • Tesoro Público is open to additional foreign currency issuance • Floating Rate Note 3-Month EURIBOR-10 bps, October 2012 3 Month EURIBOR 10 (€ 3.0 billion). Possible retapping in 2010 • Projects: • European inflation-linked issues (HICP-ex tobacco) • Schuldschein loans 37
  39. 39. Main features of Treasury funding strategy 600 Spanish debt portfolio 554 (€ billion) 500 475 400 358 319 312 307 300 229 200 100 0 995 996 997 998 999 000 001 002 003 004 005 006 007 008 009 2010 (f) 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 0 Foreign Currency Other Letras Bonos y Obligaciones Source: Dirección General del Tesoro y Política Financiera. 38
  40. 40. -75 -50 -25 25 0 25 50 75 100 125 150 Sep-0 07 Oct-0 07 Nov-0 07 Dec-0 07 Jan-0 08 Source: Bloomberg. Feb-0 08 Mar-0 08 Apr-08 Germany 08 May-0 Jun-008 Jul-0 08 Italy Aug-08 Sep-008 Oct-008 Nov-0 08 France Dec-0 08 (in bps) Jan-0 09 Feb-0 09 Mar-0 09 Apr-09 Belgium May-009 Jun-009 Jul-0 09 Aug-09 09 Sep-0 Netherlands Oct-0 09 Nov-0 09 Dec-0 09 Jan-10 Spread of the Spanish 10-year bond vs. main European peers Recent widening might be an opportunity Feb-10 39
  41. 41. -75 -50 -25 25 0 25 50 75 100 125 150 S Sep-0 07 Oct-0 07 Nov-0 07 Dec-0 07 Jan-008 Source: Bloomberg. Feb-008 Mar-008 Spread of th S Apr-008 Germany May-008 Jun-008 Jul-0 08 d f the Spanish 5 Italy Aug-0 08 Sep-0 08 Oct-0 08 Nov-0 08 Dec-0 08 France (in bps) b d Jan-0 09 Feb-0 09 Mar-0 09 Apr-0 09 Belgium May-0 09 Jun-009 i E Jul-0 09 Aug-0 09 Sep-0 09 Netherlands Oct-0 09 Nov-0 09 Dec-0 09 Jan-1 10 i h 5-year bond vs. main European peers Cheapening concentrated in the front end Feb-1 10 40
  42. 42. An atractive market to invest in Attractive prices Liquid instruments Solid and efficient Diversified investor infrastructure base 41
  43. 43. Increase in market liquidity Average outstanding size: 13 5 b € A t t di i 13.5 bn Target for average outstanding <10 years: 15 bn € 20 Target for average outstanding >10 years: 15 bn € 18 On-the-run bonds 4.10% 6.00% 3.25% 5.40% 4.40% 16 4.10% 4 10% 3.90% 3 90% 4.20% 4 20% 3.30% 3.15% 3 15% 5.50% 5 50% 4.30% 4 30% 4.20% 5.35% 6.15% 4.75% 4.60% 4.80% 14 5.00% 3.80% 5.75% 4.25% 4.90% 2.75% 12 2.30% 10 8 6 4.00% 4.70% 4 2 0 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-17 Jul-18 Jul-19 Jul-32 Jul-40 Jul-41 -13 -14 -15 -16 -17 -24 -29 -37 -11 -11 -12 -12 -13 -14 -19 -20 Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Apr- Oct- Apr- Oct- Apr- Oct- Oct- Apr- Source: Dirección General del Tesoro y Política Financiera. 42
  44. 44. Low Debt Refinancing Risk… Redemption profile of Bonos & Obligaciones (Million Euros) 50.000 45.000 40.000 35.000 30.000 30 000 25.000 20.000 15.000 10.000 5.000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020- 2024 2029 2032 2037 2040 2041 2023 Source: Dirección General del Tesoro y Política Financiera. 43
  45. 45. Low Debt Refinancing Risk… Central Government Debt refinancing risk (in % of the total portfolio) 50 42 40 30 (%) 24 20 21 22 21 20 18 18 10 7 0 1 year or less 1 to 3 years 3 to 5 years 31.12.1995 31.12.1999 31.01.2010 Source: Dirección General del Tesoro y Política Financiera. 44
  46. 46. …Thanks to relatively high duration and average life to maturity… Duration & Average Life to Maturity of the Portfolio (Letras, Bonos and Obligaciones) 8.0 (in years) 6.69 6 69 6.78 6 78 5.52 6.0 4.79 4.77 4.0 4.16 Average life France 6,24 2.0 Netherlands 6,88 Belgium 5,94 Italy 7,07 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Duration Average life Source: Dirección General del Tesoro y Política Financiera. 45
  47. 47. …while achieving lower Funding Costs Average Funding Costs (in percent) 6.0 5.5 5.0 4.5 4.32 4.0 3.5 3.81 3.49 3.0 2.5 2.27 2.0 1.5 1.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Average cost of Debt outstanding Average cost at issuance Source: Dirección General del Tesoro y Política Financiera. 46
  48. 48. Reliance on foreign funding relatively moderate External public sector debt in 2009 100 (% of GDP) 90 80 70 60 50 40 30 20 10 0 Italy Argentina Germany Greece Austria France Ireland Finland Spain United Belgium Kingdom States herlands United G K Neth A Source: OECD. 47
  49. 49. Banks financing of government debt in line with Eurozone average Holdings of government debt November 2009 (% of bank assets) 25 20 15 10 5 0 ermany ortugal Belgium lovakia Greece France Eur area Ireland Finland Italy erlands Spain Austria ro Po F F G A Nethe Ge B Sl Source: Citi. 48
  50. 50. Spanish Banks’ funding from ECB around Eurozone average Recourse to ECB funding (% of total bank assets) 10% 8% 6% 4% 2% 0% IRL IT FI NL GR AU FR PO GE ESP BE jul-08 jul 08 oct-09 oct 09 Source: Deutsche Bank. 49

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