Therefore, it was opted to establish this conditionality and to promote an integration process designed to bring about sizes that would enable the institutions to be more efficient and to more readily obtain funding from the markets; to implement capacity-reduction plans; to introduce management changes; to write down balance sheets with a charge to private funds; to convert savings banks into banks, and to raise capital on the markets. True, a plan of this scale and complexity does not enable difficulties to be overcome overnight. Yet it is not an overstatement to say that, once the process has been concluded, it will have brought about a reform that should be valid for many years. Let’s now look at our economy’s biggest problem: the difficulties our legal and institutional framework poses for job creation and which mean that, even in good times, Spain is one of the countries with the highest unemployment rates in the world. Earlier I referred to the importance of identifying and acknowledging problems. It suffices to look at the figures available and, in particular, at our very high unemployment rate – at 21.3% – to see that we have a serious home-grown problem, stemming from the shortcomings of our legal and institutional framework. Pick up a copy of The Economist and go to the final pages, where there is a table with the economic data for the 40 biggest economies in the world.
Perhaps, the greatest challenge is to achieve a lasting peace. Economic growth and peace are interlinked. Therefore, the process to accelerate economic growth and the peace process need to move in tandem. Further, structural reforms have to be continued. In this connection it is necessary to convince all stakeholders of the need for reforms to enhance the efficiency in the economy. Macroeconomic management has to be strengthened further to contain macroeconomic imbalances. In this regard, we have had the benefit of considerable assistance from international financial institutions, in particular, the IMF, World Bank and the ADB. Not only have they provided funds at critical times, but they have also been most helpful in providing technical assistance and advice. Sound macroeconomic management requires that the fiscal consolidation process be continued as required in the Fiscal (Responsibility) Management Act, to enhance public investment, attain a sustainable level of public debt, and reduce inflationary pressures. This has to be accompanied by the continuation of a monetary policy that would maintain price stability and avoid the emergence of inflationary pressures that are highly injurious, particularly to the most vulnerable groups in society. The Central Bank will continue to focus on this area. In addition, reforms in the financial sector need to be pursued vigorously to ensure a vibrant and stable financial environment that would be able to take advantage of the links to the international markets and support growth. The high international price of fuel is a major concern.