General Government Borrowing Hit Another Record High In March: 1.45 Trillion Euros (117.7% Of GDP)

LamanodediosPedro Sánchez

Public indebtedness continues to break records. In March, debt registered a new all-time high of over 1.45 trillion euros after increasing by 12.381 billion euros compared to February, according to the statistical advance published yesterday by the Bank of Spain. It is true that the debt-to-GDP ratio stood at 117.7%, far from the 125% it exceeded in March last year. However, that was exclusively due to the economic rebound, which has reduced the relative weight of debt over gross domestic product. In absolute terms indebtedness has soared by more than 230.5 billion euros since the end of 2019.

Although the public debt data released yesterday by the Bank of Spain refers to the Public Administrations as a whole, the real architect of this quantitative leap has been the State, which accumulates practically nine out of every ten euros of national liabilities. Specifically, the State’s debt climbed to 1.27 trillion euros in March, 87.6% of the total, having grown by 12.068 billion euros in just one month. Since end-2019, its debt has soared by more than 219 billion euros, taking its indebtedness to unprecedented levels in history.

As the government explains in the stability plan submitted to Brussels, the debt-to-GDP ratio will still be around 109.7% in 2025; that is more than 14 points higher than the 2019 figure and almost 50 points above the European fiscal rules.

For now, Sánchez’s government is still pinning the reduction of the deficit on purely cyclical aspects (growth and increased revenue) rather than structural adjustments. Last week, the Airef warned that, in the absence of a real roadmap for fiscal consolidation, the structural deficit, which includes permanent expenses such as pensions, will be stuck at around 4% by 2025. And it will boost public debt, which could soar to levels of 140% in two decades,

Spain closed 2021 with the fourth highest public debt in the EU, 118.4%, behind only Greece (193.3%), Italy (150.8%) and Portugal (127.4%).

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