Spain: Increase debt by 5% to increase GDP by 2.5% (with issued debt already at 137% of GDP)

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Miguel Navascués| In 2023 the net debt issuance of the Kingdom of Spain was €72,878 m, 5% of GDP 2022. GDP grew by 2.5% in 2023 but with inflation it increases nominally more (€115,000 m) and the ratio falls to 109% of GDP. In reality, however, the debt issued is much higher, at 137% of GDP.

Because the ‘official’ debt is 109.8% of GDP. But this figure is arrived at by consolidating the liabilities of some regional and local governments that are acquired by the central state, which accounts for them as an asset. In accounting terms, they are an asset, but not a liquidable asset because they have no market in which they can be sold. Consolidation makes it possible to “lighten” the debt burden on GDP in a fictitious way, because sooner or later the government will have to issue its own debt to redeem it.

This (EU-approved) method of burden relief accounted for 4.3% of GDP in 2004. In 3Q23 it reached 21.4%. The Autonomous Regions and local councils are taking on more and more debt, transferring the burden to the state, and the latter accounts for them as ‘phantom’ assets, with no market in which to realise them and therefore with no attributable book value. The debt issued, held by creditors, adding the ‘consolidated’ part is in reality 137.9% of GDP.

About the Author

Miguel Navascués
Miguel Navascués has worked as an economist at the Bank of Spain for 30 years, and focuses on international and monetary economics. He blogs in Spanish at: http://