Spanish government debt hits new record at nearly 118% of GDP

by Lorraine Williamson
government debt
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MADRID – Once again, the joint debt of all governments in Spain reaches a record. The amount of €1.45 trillion is 117.7% of the value of the entire economy of the country. 

In the past year, government debt has increased by €60.78 billion. With this, the debt of all governments together continues its inexorable and slow upward path. It is a trend that will be very difficult to reverse or adjust. This conclusion is based on forecasts that experts have provided in recent days. 

The now abolished European fiscal rules set a deficit ceiling of 3% of GDP and the debt-to-GDP ratio should not exceed 60%. The first quarter of 2022 ended with 117.7%. Therefore, that gives an idea of ​​what has happened to this variable in recent years. The debt-to-GDP ratio has practically doubled over the past decade. From 60% in 2010 to about 120% now. That is a worrying evolution, both for the level reached and for the short time in which this doubling occurred. 

Extraordinary measures 

Extraordinary measures indeed had to be taken in these years to cope with an unprecedented financial and debt crisis. Added to this was the recent crisis caused by the corona pandemic, along with the war in Ukraine which has exacerbated the situation. 

The Bank of Spain published the debt balance of all government services on Tuesday. That represents a new all-time high of €1.454 trillion, 117.7% of GDP. In the past year, government debt rose by €60.78 billion, an increase of 4.4%. However, the weight of debt in GDP has fallen from 125.2% in the first quarter of 2021 (an all-time high) to 117.7% this year. 

This level exceeds the government’s target for the whole of 2022, which was set at 115.2% in the Stability Plan. The Spanish Bank last Friday estimated in its projections that the total debt of government services would be 114.9 % of GDP by the end of this year. By the end of 2023 and 204, it would be reduced to 113.2% and 112.5%, respectively. 

Largest debt with central government 

By type of government, the central government in Madrid has the largest debt, namely €1.31 billion, which amounts to 105.8% of GDP. The year-on-year growth was 4.7%. 

Debt at regions 

The debt of the autonomous communities grew by 0.7% year-on-year to €309,741 million in the first quarter. That corresponds to 25.1% of GDP, 2.6 points less than in 2021. 

Debt at municipalities 

Municipal debt increased slightly by €326 million compared to the first quarter of 2021. It increased by €378 million compared to the end of 2021, bringing the ratio above GDP to 1.8%, to a total of €22,446 million. 

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Social Security Debt 

Social security debt set an all-time high in the first quarter, reaching €99.19 billion. That is an increase of 16.2% year on year. It is the result of the loans provided by the state to finance a significant portion of its budgetary imbalance. 

Within the autonomous communities, Catalonia (€83,722 million), the Valencian Community (€53,049 million), Andalucia (€35,865 million), and Madrid (€34,831 million) account for two-thirds of all regional debts. 

Large municipalities 

Of a total of €22.45 billion in debt from local governments in the first quarter, about €5 billion was in the hands of the 13 largest Spanish municipalities with more than 300,000 inhabitants. 

Out of the €4.9 billion from these larger municipalities, the €1.9 billion that reached Madrid fall out, an increase of €250 million compared to the end of 2021 when it was €1.68 billion. 

Behind Madrid is Barcelona with a debt of €792 million compared to €818 million at the end of 2021, while Zaragoza has €663 million, just €3 million more than at the end of 2021. 

Of the large municipalities, the financial situation of Alicante stands out, as that city has no debts and Las Palmas with only a debt of €1 million. 

The municipality of Valencia has a debt of €282 million, compared to €269 million at the end of 2021. Malaga registered €276 million and Murcia registered €260 million in debt at the end of the first quarter, compared to €267 million at the end of last year. 

The Municipality of Seville ended the first three months with a debt of €218 million, down from €233 million in 2021, while Palma de Mallorca closed the quarter with a debt of €178 million; Córdoba registered €170 million; Valladolid €143 million and Bilbao €27 million. 

Also read: Previous record government debt

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