Fitch affirms Spain at BBB+; outlook stable

Fitch ratings agency has affirmed Spain at BBB+ with “stable” outlook.

Key quotes from Fitch's press release:

"The IDRs and Outlook balance Spain's high value-added economy, strong economic recovery, ongoing financial sector repair and improved current account position with still high unemployment and debt ratios, fiscal slippage and political uncertainty.

Spain has continued to underperform against its fiscal targets. The 2015 general government deficit was confirmed in April at a higher than expected 5.1% of GDP, down from 5.9% in 2014 but well above the 4.2% target. Revenues as a share of GDP fell to 38.2% in 2015, from 38.6% in 2014, largely due to income and corporate tax cuts. The main slippage was on the expenditure side, and regional government and social security budgets, and measures have been announced to address weak enforcement of fiscal powers over regions. In structural terms, the fiscal deficit is estimated to have increased by close to 1% of GDP in 2015, reversing a previous reduction. Government debt fell marginally to 99.2% of GDP in 2015, from 99.3% the year before, due to negative stock-flow adjustments totalling 1.5% of GDP. 

The fiscal deficit targets in Spain's 2016 stability programme were loosened by 0.8pp to 3.6% of GDP for 2016 and by 1.5pp to 2.9% for 2017. Fitch forecasts higher deficits of 4.3% of GDP in 2016, and 3.5% in 2017, with no structural deficit improvement."