2023-07-19 00:56:40
If the worst omens of some analysts that the next big economic crisis to come will be debt come true, Spain is one of the countries that seems predestined to have a very bad time. And it is that the debt accumulated by its public administrations has not stopped rising until the end of May with a new historical record of 1.54 trillion euros, according to statistical data released yesterday by the Bank of Spain.
Although the increase has been progressive, in the last five years, coinciding with the presidency of Pedro Sánchez, it has accelerated to the point that it has risen by 332,768 million euros, 27.5% compared to the 1.2 trillion of euros in which it closed in 2018. Only in the last year, public debt has grown by 5.8%, with 85,176 million euros more, as a result of lower income and higher expenses derived from the pandemic crisis and because of the war in Ukraine as well as the rise in prices. The central administration debt has grown even more since 2018, 32.5%, going from 1,034 trillion to 1,371 trillion euros.
Social Security
However, the largest percentage increase in debt in the five-year period has been that of Social Security, which has gone from 41,194 million euros to 106,169 million euros, which means that it has shot up by 157%. In the last 12 months, Social Security debt has risen 7%. The Bank of Spain explained that the increase in Social Security indebtedness in the last year is due to the loans granted by the State to the General Treasury of the organization to finance its budgetary imbalance.
Despite the new increase in the volume of debt registered in May, the public debt ratio remains around 113% of GDP due to the growth experienced by the Spanish economy in recent quarters. In fact, from the Ministry of Economic Affairs, they highlighted yesterday that the provisional data on public debt confirm that the ratio over GDP has continued to moderate in May in line with recent months. “The commitment to fiscal consolidation and the higher growth forecast for Spain by the main national and international organizations will allow the reduction in the debt/GDP ratio this year to be greater than expected,” said the Department headed by Nadia Calviño. .
Government satisfaction
The Government, despite the bulky volume represented by the 1.54 trillion public debt that Spain accumulates in an environment of higher interest rates, thus defends that the country has “easily” met the fiscal targets set for three consecutive years and In the Stability Program, the reduction of the public deficit to 3% and the public debt ratio below 110% of GDP are brought forward to 2024, forecasts endorsed by the European Commission. Already in 2022, a record debt reduction of 5 percentage points was achieved in one year, highlights Economía. From the maximum reached at 120.4% of GDP at the end of 2020, the Spanish public debt has fallen to 118.3% in 2021, to 113.2% in 2022 and to 112.8% in the first quarter of 2023 Although in volume, it has not stopped rising.
The Executive also highlighted that Spain maintains the confidence of the markets and investors, as reflected in the maintenance of the risk premium around 100 basis points, and an interest rate on short-term debt similar to that of Germany.
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