Staff from the Commission, in liaison with staff from the European Central Bank, carried out the ninth post-programme surveillance visit to Spain on 9-10 April 2018. Amid continued strong economic growth, the Spanish banking sector enjoys overall comfortable liquidity, and several banks have increased their issuance of debt securities. Moreover, banks have enjoyed continued profitability while capital buffers have been supported by the issuance of both core and non-core capital instruments. This has facilitated further reductions in non-performing loans (NPL) on balance sheets. The NPL ratio for Spanish banks’ combined domestic and international activities has declined to close to the EU average. Overall, the Spanish economy continues to enjoy robust growth and its rebalancing has progressed further, but high private and public debt levels and unemployment still represent vulnerabilities. Spain needs policies that ensure a durable growth path and higher productivity growth. This includes steps to continue reducing unemployment, make the labour market more inclusive, improve the business environment and enhance the innovation capacity of the economy.