Beyond the short term, fiscal policy will face three major challenges. The first challenge will be to preserve the progress made with fiscal consolidation, while at the same time maintaining sufficient flexibility in the new, more decentralised fiscal framework that is in force since 2002-03. The second medium-term challenge relates to raising public sector efficiency further in this new framework. Thirdly, and over the longer term, reforms are needed to prepare Spain for the consequences of population ageing as the viability of the public finances will be threatened by the steep rise in pensions and medical and social expenditure as of 2020-25.