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>Diputacion Foral de Alava's ratings affirmed by Fitch IBCA;Ratings Affirmed
For Spain's Diputacion Foral de Alava


- Fitch IBCA -

LONDON and BARCELONA, Spain, Oct. 13 /PRNewswire/ -- Fitch IBCA, the
international rating agency, has affirmed its Long-term foreign currency
rating of 'AA' and Short-term rating of 'F1+' of Diputacion Foral de Alava
(DFA).  These ratings apply to senior unsecured debt issues.

Alava's economy continues to out-perform the Basque Country as a whole, and
Spain, in terms of both real gdp growth and gdp per capita.  The region has a
diversified economy, with a large concentration of light industries, and has
not suffered the structural problems associated with the heavy industry sector
that have affected the other Basque provinces. Alava's economy is strongly
export oriented, accounting for 29% of the Basque Country's total exports; 70%
of exports are to the EU. Unemployment, although still above the European
average, is considerably lower than the Basque and national averages.

The DFA, in common with the other two Basque provinces, has far wider fiscal
powers than other provinces and regions in Spain. Following the negotiation of
the economic agreement with the state in 1997, the DFA can now collect special
taxes, which were previously collected by the state.  This transfer of
authority contributed to a substantial rise in total taxation revenues during
the year. The provincial government is not dependent on current and capital
transfers from other tiers of government, and this gives the provincial
government greater incentive to improve tax collection efficiency, although it
does make the province more vulnerable to changes in the local economic cycle.

The DFA has exerted very good control over its budget and has consistently
reported a budget surplus on an accrual basis.  Future capital expenditure is
expected to be moderate and is to be funded from internal resources and by
modest increases in debt.  The export-led recovery of the economy of the
province, which has continued through 1998, should stimulate industrial
activity and lead to continued reductions in the level of unemployment. The
DFA exercises a very conservative budgetary policy, prudent financial
management and efficient revenue collection.  The DFA's long-term rating is
constrained by Spain's foreign currency rating and there is scope for it to
rise should the Fitch IBCA sovereign currency rating of Spain be raised.

SOURCE  Fitch IBCA   <