Spain represents a large and high-income European economy. Its credit profile benefits from the Euro’s reserve currency status as well as the country’s strong institutions. These strengths are partly offset by high external and general government debt. Going ahead, Spain’s ageing population poses a challenge to the economy’s growth potential and government finances.
Spain continues to receive support from the EU in the form of the Recovery and Resilience Facility (RRF), introduced during the pandemic. Spain is entitled to receive EUR 163 billion (~13% of GDP) in grants and loans under the facility. The plan requires all milestones (qualitative achievements) and targets (quantitative achievements) to be completed by August 2026. Thus, Spain’s progress in meeting the agreed milestones and targets remains a key monitorable going ahead.