Spanish public debt falls despite rise to more than 118% of GDP

by Lorraine Williamson
public debt

Spain closes 2021 with a government debt of more than €1.4 trillion. Although almost €82 billion were added last year, government debt was 1.6% lower than at the end of 2020. Spain’s public debt is now 118.4% of GDP, lower than the Spanish government had budgeted. 

More precisely, Spain’s public debt amounted to €1,427,763 million at the end of 2021. Despite the 6.1% increase in volume in one year, the public debt fell to 118.4% of GDP thanks to increased economic growth. In 2020, the national debt amounted to 120% of GDP, which means that the debt is now 1.6% lower. 

Bank of Spain presents public debt figures for 2021 

The Bank of Spain published these figures on March 31. Despite yet another rise in government debt, Spain does not reach another record. In September 2021, the government debt amounted to €1.432 trillion or 122.1% of GDP. 

The Spanish bank is mainly looking for the cause of the extra government debt in 2021 in the measures that the government has taken to alleviate the consequences of the pandemic, such as financing ERTE benefits. In 2020 and early 2021, government debt has increased significantly to keep the economy in Spain afloat with the corona measures taken. 

Spain expects shrinking government debt in the coming years 

The Ministry of Economy said that the growth of the economy – mainly in the second half of 2021 – positive developments in government revenues and the making of generous budget expenditures have ensured that government debt has decreased in 2021. The Ministry expects this trend to continue in the coming years. 

Distribution of the national debt

The Spanish government debt consists for the most part of debt from the national government of Spain. The Kingdom of Spain ended 2021 with a total debt burden of €1.280 trillion (106.2% of GDP). The debt of the autonomous community authorities in Spain ended last year at €313,000 million (25.9% of GDP). 

Spain deeply in debt due to social security guarantee 

The budgets for paying for the social security system in Spain did reach a peak. The debt for this amounted to no less than €97 billion at the end of 2021, an increase of 13.9% compared to the end of 2020. The increase is due to loans granted by the State to social security to finance the deficit in the budget. and guarantee the payment of pensions. 

Despite the announced pension reforms, this part will not change in the near future. In 2022, the government has set a total budget of more than €36 billion to continue to pay for social security expenditures. 

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