Public debt reaches 125.3% of GDP, its highest level in 140 years

Spain, 1881. Queen Alfonso XII, Mateo Sagasta wins the elections to Antonio Cánovas, life expectancy at birth does not reach quarantine and the public debt exceeds 149% of GDP, a level that has not been touched again. Spain, year 2021. Life expectancy at birth exceeds 80 years, the planet recovers from the greatest pandemic of the last century, the debt of the Public Administrations, as reported this Friday by the Bank of Spain, closes the first quarter in 1,393 billion euros and reaches 125.3% of GDP, a percentage that has not been seen for 140 years.

The impact of the pandemic is forcing us to go very far back in the statistical series to find similar precedents. According to data from the Bank of Spain, the overall debt balance increased by 13.7% compared to last year. The one that grew the most was that of the Central Administration (14%), followed by that of the municipalities (3.3%) and the autonomous communities (3%). The peak of 125.3%, reached at the end of March, anticipated last month and now confirmed, represents an increase of 5.4% compared to the end of 2020.

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The Ministry of Economy has defended in recent weeks that the increase in March is “seasonal”, since in the third month of the year emissions intensify due to the higher maturities in April, but the numbers are indicative of the enormous wear and tear on the coffers of the State that is assuming the pandemic, which is forcing States to resort to debt markets to save as much of the productive fabric as possible until the recovery takes hold. Before entering the ill-fated pandemic year, the debt closed 2019 at 95.5%, almost thirty points less than today.

The improvement planned for the second part of the year will reduce this percentage. According to Brussels, Spain will be the country of the Twenty-seven that will grow the most this year (5.9%), with which the increase in GDP may reduce the proportion of debt over the size of the economy. In any case, the large international organizations maintain very high ratios for Spain: the IMF expects the Spanish public debt to close 2021 at 115% of GDP, the OECD at 119.7%, figures very similar to those of the European Commission (119.6%).

As the Bank of Spain explains this Friday, short-term debt was the one that has increased the most in the first three months of the year (29.2% more), compared to 11.3% of long-term debt, if However, the latter is still the predominant by far: 92.7% of what Spain owes is assigned to long-term instruments. If the amount of the debt is divided among the Spanish population, the debt per inhabitant is close to 30,000 euros.

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