S&P has updated its

rating

for Spain (A / A-1) although it affirms that its outlook continues to be negative regarding fiscal and structural challenges, also warning that risks to Spain's fiscal and growth path persist.

Regarding the recovery of the Spanish economy, S&P expects them to return to

2019 levels in 2022

, as authorities gradually eliminate social distancing measures and commercial and global travel recovers.

Regarding European funds, it is pointed out that Spain is eligible for 12.8% of GDP in loans and transfers from the Recovery and Resilience Fund of the European Union, 2.7% of GDP that the Executive will spend in the framework of the 2021 budget plan.

They also project the consolidation

of Spain's budget deficit to 4.2%

of GDP in 2022 from an estimated 11.8% last year, as the recovery in demand benefits revenues and the extraordinary economic support is gradually phased out.

The confirmation follows in the wake of the Canadian agencies DBRS Morningstar and Moody's, which on March 5 also ratified their notes 'A / R-1' and 'Baa1', respectively, to Spanish sovereign debt, in both cases with a perspective

stable

.

In the case of S&P Global Ratings, the

negative

bias

prevents a potential future downgrade if the risks that you now observe crystallize.

In the report released this Friday, it justifies the bias in the vulnerabilities that the crisis has created in homes and companies, and warns that "

some SMEs could face insolvencies, increasing contingent liabilities

" when the Government begins to withdraw the extraordinary support measures.

On the other hand, it warns of the potential increase in the deficit of the social security system as the population ages if there is no political commitment to increase the effective retirement age or extend the duration of compulsory contributions.

"We think that the persistent deficits of social security in Spain reduce the probability that the general budget of the State will have primary surpluses in the projection horizon", explains his report.

Its experts say it could lower the ratings in the next two years if they see that the country's growth potential has been weakened, for example, by a reversal of labor or product market reforms.

They also warn that the ratings "could be subjected to stress" if there is a use of public guarantees used to give loans "on a large scale" and force debt increases beyond their forecasts.

Conversely, S&P Global Ratings affirms that it could improve its score for the Spanish Treasury "if the Spanish economy recovers strongly over the next few years, budgetary consolidation accelerates and EU transfers lead to improvements in growth potential from the country".

Political risks

In a more political key, the firm details that the Government led by the PSOE is the first coalition government in the modern history of Spain, and "has faced a series of political challenges" as it lacks a parliamentary majority due to the "need to seek the

legislative support from a wide range of smaller political parties

, including regional ones. "

While noting that the pro-independence platform of the Generalitat of Catalonia "continues to be a point of friction in national politics," he acknowledges that, "until now, political tensions have not weighed significantly on Spain's economic performance."

In this regard, it recognizes that policy formulation has been "generally effective in recent years", promoting sustainable economic growth.

But his report also advises that policy changes "are possible" due to changes in administration, "which is currently weak given the political landscape" or because of "possible destabilizing influences from underlying or significant long-term socio-economic challenges." .

According to the criteria of The Trust Project

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