Spain public debt exceeds psychological barrier 125 percent, the highest public ratio to GDP since 1881 - The debt of the general government as a whole has not stopped growing in recent months as a result of the coronavirus crisis and seems to have no brake according to the latest data, which reflect a new historical record of 1,392,733 million euros in absolute terms in the first quarter of the year.

Public debt has risen by 47,293 million euros (5.4 GDP points) compared to the end of the 2020 financial year, when an all-time high of 1.34 billion euros was set by the Covid-19 crisis and the incorporation of the Sareb's 15,000 million euro hole into the public perimeter of accounts, according to data published this Friday by the Bank of Spain.

The figure shows that the Covid-19 crisis does not give respite in terms of the increase in the deficit and, consequently, in the public debt, as a result of the measures implemented by the Government to alleviate the effects of it, which continue to shoot the debt, after years of increase without having been able to decrease significantly since the surplus of the year 2007.

Spain public debt exceeds psychological barrier 125 percent

In this way, the public debt balance according to the Excessive Deficit Protocol rose year-on-year by 13.7%, since public debt has increased by 168,213 million euros in a year as a result of the Covid-19 crisis and the measures implemented. Thus, the indebtedness of the public administrations accumulates five consecutive quarters upwards, or what is the same, one year and one quarter skyrocketed.

In terms of the ratio to GDP, the almost 1.4 trillion euros of public debt in the first quarter represents 125.3% of GDP, well above the level predicted for this year (119.5% of GDP). Last year the public debt closed at 120% of GDP after incorporating around 34,000 million Sareb debt due to an accounting change from the Statistical Office of the European Union (Eurostat). Thus, the highest public ratio to GDP has been achieved since 1881.

The increase in public debt is due to the incorporation of Sareb's liabilities and the increase in public expenditure made by the Government and administrations in the adoption of measures to mitigate the effects of the crisis and the mobility limitations derived from successive states of alarm, such as the last package of direct public aid of 11,000 million euros approved by the Executive. It also reflects the decline in income.

Spain public debt exceeds psychological barrier 125 percent

The debt figure is even higher than that which the Bank of Spain itself had given on 18 May relative to the month of March, which had initially set a liability of 1,392,696 million euros. However, sources from the Ministry of Economic Affairs and Digital Transformation told Digital Economy about the data that the increase has a seasonal character, since March is usually the month with the highest ratio, due to the tendency to intensify emissions in the first quarter before the important expiration of April.

From April the ratio will be adjusted downwards by debt maturities and lower issues, according to the same sources, which point out that April data is usually lower than March, and the end-of-year data dreams to be much lower than March.

In any case, from Economy assure that this figure is "compatible" with the estimate of 119.5% of GDP by the end of the year foreseen in the Stability Program sent at the end of April by the Government to Brussels.

Spain public debt exceeds psychological barrier 125 percent

By government, debt in the first quarter of the year has risen above all in the State and the autonomous communities, although it has risen in all administrations compared to the fourth quarter of 2020.

The largest volume of debt was recorded once again in the State, setting a record of 1.24 billion euros, which represents 112.3% of GDP, due to the extra effort of spending made to deal with the impact of the coronavirus crisis by successive states of alarm and transfers made to the Autonomous Communities. Year-on-year increases by 14%, adding 152,942 million compared to the first quarter of 2020, when it was impacted in half a month by the Covid crisis, and compared to the previous quarter grows by 12.2%, with 41,238 million more.

Likewise, the debt of the autonomous communities rose to a record of 307,316 million euros, 27.7% of GDP, with a year-on-year increase of 3%, with 9,037 million more. On a quarterly basis, the regions add 3,694 million euros to their liabilities, an increase of 1.2%.

In the case of local governments, these administrations also increased their debt, to 22,115 million, 2% of GDP. This is 170 million more than the previous quarter but on the other hand it falls by 757 million compared to the liabilities it presented in the first quarter of 2020.

Finally, the debt of the Social Security administrations remained high, reaching 85,355 million in the first quarter, 7.7% of GDP, with an increase of 55.1% year-on-year, totaling 30,330 million in imbalance in a year.

Spain public debt exceeds psychological barrier 125 percent: The rebound in Social Security debt is due to loans granted by the State to the General Treasury of Social Security to finance its budgetary imbalance.

In recent years the State has transferred loans to guarantee the payment of pensions, whose monthly bill already exceeds 10,000 million euros, a figure that doubles in the months of extra pay. The increase in debt also includes the impact of aid for those affected by Covid, aid for temporary employment regulation (ERTE) and the benefit for self-employed.

Likewise, the transfer of 16,000 million euros through the Covid-19 Fund to the autonomous communities has influenced the state debt to finance and cover expenses in health, education and aid to affected groups.

At the end of the quarter, the data show that most of the debt, 1,201 billion, was concentrated in debt securities, both long-term (1,113,908 million) and short-term (87,468 million).

Within the autonomous communities, Catalonia (80,399 million euros), Valencia (51,117 million), Madrid (35,352 million) and Andalusia (35,098 million) continue to account for two thirds of all debt held by the autonomous governments in the third quarter.

However, Andalusia has managed to reduce its debt by 1,000 million euros quarterly, being one of the only four that has decreased its liabilities, along with the Balearic Islands, Cantabria and Navarra.

Spain public debt exceeds psychological barrier 125 percent

After Catalonia, the Valencian Community, Madrid and Andalusia, the communities of Castilla-La Mancha (15,659 million), Castilla y León (12,983 million), Galicia (11,738 million), the Basque Country (10,924 million), Murcia (10,839 million) and the Balearic Islands (9,008 million) figure by May.

Aragon (8,767 million), the Canary Islands (6,694 million), Asturias (4,907 million), Extremadura (5,084 million), Navarra (3,751 million), Cantabria (3,340 million) and La Rioja (1,656 million).

As a percentage of GDP, the Valencian Community, with a debt of 49.4%, continues to lead the most indebted regions in relation to their wealth, followed by Castilla-La Mancha, with 41%, and Catalonia with 38%. On the other hand, the Basque Country (16.4%), the Community of Madrid (16.5% of GDP) and the Canary Islands (15.9%) have the lowest debt relative to GDP.

As for the municipalities, among which they have more than 300,000 inhabitants, Madrid, with a debt of 1,938 million euros, continues to lead the most indebted local corporations, followed by Barcelona (776 million) and Zaragoza (707 million).

However, Madrid has reduced its liabilities by 12 million compared to the previous quarter and by 67 million compared to a year ago, while Barcelona has increased it in the last year by 45 million, although it has reduced it by 25 million compared to the end of 2020.

# Spain public debt exceeds psychological barrier 125 percent #