The wider the fans, the more uncertain the forecasts are. If economic developments are broadly in line with projections, economic agents can also expect interest rate developments to be approximately as projected. On the other hand, the interest rate path may shift in relation to the current path if economic prospects change or if the effects of interest rate changes on output, employment and prices are different from those projected. Thank you for your attention. 4  BIS Review 34/2007  BIS Review 34/2007  5  6  BIS Review 34/2007  BIS Review 34/2007  7  8  BIS Review 34/2007  BIS Review 34/2007  9  10  BIS Review 34/2007  BIS Review 34/2007  11  12  BIS Review 34/2007  BIS Review 34/2007  13  14  BIS Review 34/2007  BIS Review 34/2007  15  16  BIS Review 34/2007  BIS Review 34/2007  17
This is a challenge that calls for the involvement of all levels of government. From this standpoint, it is very important to adapt the analysis of public finances and its economic policy implications to the current Spanish situation, marked by highly decentralised public spending. Leaving aside the transfers between different tiers of  BIS Review 117/2006  5  government and interest payments, which reflect past financing patterns, the volume of spending by territorial governments is almost two and a half times that within the State sphere. Such a figure shows the enormous increase in the role of these agents, which has significant consequences for budgetary policy conduct, both in terms of its contribution to macroeconomic equilibrium and as regards its influence on the economy’s growth capacity in the medium and long run. From the standpoint of the contribution to macroeconomic equilibrium, the initial data on the regional governments' budgets for 2007 point to a balanced budget target for the year. We might wonder, however, whether the macroeconomic situation I have described, at a cyclical juncture marked by a prolonged expansion, would require the setting of somewhat more ambitious targets, in line with the spirit of the new Budgetary Stability legislation, even though these are only legally binding as from the 2008 budget. Also, from the standpoint of their contribution to long-term growth, the role of the territorial governments in managing the public spending items of most relevance for improving the Spanish economy's competitiveness acquires considerable importance.