As my appearance is part of the parliamentary discussion of the Budget, I shall be analysing the Spanish fiscal policy situation. Allow me, however, to refer also to other policies I consider essential to resume the path of budgetary stability and to emerge from this crisis in the best possible condition. First, though, I would like to briefly assess the international setting and the economic outlook for the euro area which, as is well known, determines monetary policy. Projections from various international institutions (such as the IMF and, more recently, the European Commission and the OECD) suggest we will resume positive growth rates in most countries in 2010 and 2011. But they constantly stress that these estimates are shrouded in greater-than-usual uncertainty, since the take-off of productive activity needs a sound financial basis, which in turn requires that the normal functioning of intermediaries and financial markets be fully restored. In these circumstances, one of the main difficulties governments and central banks face is to identify the right time to disengage the extraordinary measures adopted in the financial, fiscal and monetary fields. A premature withdrawal might undermine the progress made, while maintaining an expansionary policy over an excessive period might give rise to further imbalances that are difficult to reverse and have negative consequences for growth. For the time being, what is needed is to move forward in the design of stimulus-withdrawal strategies, so these may be applied when the right time comes.
Miguel Fernández Ordóñez: Recent developments in the Spanish economy Testimony by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, before the Senate Budgetary Committee, Madrid, 23 November 2009. *  *  *  Ladies and gentlemen, I appear before this Committee as part of the parliamentary discussion of the State Budget for 2010, at a time when the deep international financial and economic crisis is giving way to a recovery, albeit one that is expected to be slow and not free from uncertainty. Following the successive downward revisions to growth projections during the summer of 2007, the outlook has begun to improve in recent months. Indeed, many countries are posting positive growth rates for the third quarter of 2009. Yet we must acknowledge that this improvement is largely the outcome of the extraordinary large-scale measures adopted globally to boost demand and support the financial system. We still do not know whether the incipient world recovery is sufficiently self-sustaining for the exceptional stimuli to begin to be withdrawn without the risk of economic activity falling again. In the case of the Spanish economy, the situation is more complex. While there has been a similar or even lesser decline in output than in other developed countries. However, the effects in terms of employment and public finances have been sharper. Hence the role economic policies must play to consolidate the recovery is essential. We are thus at a crossroads where it is vital to make the right diagnosis and select the right economic policy tools.