This report provides an assessment of Spain's economic, fiscal and financial situation and is based on the findings of visits to Madrid on 12-18 March and 14 April 2015 by staff from the European Commission and the European Central Bank (ECB). The European Stability Mechanism (ESM) participated in the meetings on aspects related to its own Early Warning System. The report also covers the specific monitoring by the Commission of policy progress in the context of the Macroeconomic Imbalance Procedure (MIP). Overall, the report finds that Spain is benefiting from structural reforms, fiscal consolidation and the recapitalization of its banking sector. These factors are contributing towards the stabilization of the financial sector, easier financing conditions, a strong economic recovery, an improving labor market, and cheaper borrowing costs for the Spanish state. The expansion of economic activity is also supported by lower oil prices, a favorable exchange rate and a less restrictive fiscal policy. As a result, the report finds that repayment risks for Spain’s ESM loan are very low at present. Nevertheless, significant economic imbalances remain. The momentum of reforms needs to be maintained and measures need to be fully and effectively implemented so as to sustain the recovery, further rebalance the economy and maintain confidence.