RTTNews - Wednesday, the Moody's Investors Service affirmed Spain's Aaa local and foreign currency government bond ratings and stable outlook. The rating agency noted that the various government debt ratios deteriorated markedly during the downturn, although from a relatively low level.

Anthony Thomas, a Vice President in Moody's Sovereign Risk Group said, By running budget surpluses prior to the crisis and paying down debt, Spain created the fiscal space to allow it to register substantial budget deficits to support economic activity during the downturn. He added that the government needed a credible exit strategy from its current fiscal policy if its debt affordability metrics are to remain within Aaa parameters.

The outlook for the overall deficit would depend on the combination of medium-term growth prospects, future interest rate developments and explicit measures adopted by the authorities. Thomas added that the rating agency would closely watch the economy and public finances and ratings would be reassessed if current expectations are not satisfied.

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