Public Debt Rises In June To 1.47 Trillion

The indebtedness of the total public administrations (Public Debt) once again reached its historical maximum, reaching 1.47 trillion euros in June, according to figures issued by the Bank of Spain, which implies an increase of 18,908 million euros compared to the month of May . In this way, according to the advance figures, the interannual growth rate of the debt of the Public Administrations (AAPP) is 3.6%.

With respect to the Gross Domestic Product (GDP) of the last four quarters, the debt ratio stood at 116.8% in the second quarter of the year. This translates into a more moderate growth since in the first quarter it closed at 117.7%.

Even so, despite this moderation with respect to GDP, the objective set by the Government of maintaining it at 115.2% throughout 2022 is not met, in accordance with what is reflected in the Stability Plan sent to Brussels.

The Ministry of Economic Affairs and Digital Transformation ensures, through a statement, that this reduction in the ratio of debt to GDP is “for the first time since September 2020” below 117 percentage points.

Regarding its forecasts in the Stability Plan, the Executive highlights that the current trend (down to 116.8% of GDP) “is compatible with the forecast of 115.2% of GDP” made in April .

Debt by administrations

As far as the breakdown by type of public administration is concerned, the central administration is the one with the largest volume of debt, specifically 1.29 billion euros, that is, 87.7% of the total. This means that its balance increased 18,443 million, 1.4% more compared to the end of the last quarter. In year-on-year terms, the central Administration increased its liabilities by 59,393 million compared to June 2021 (1.24 trillion), which shows a growth rate of 4.8% in one year.

The Spanish autonomous communities closed June with a debt amounting to 316,647 million , that is, 2.9 million more than in May and 1.5% more than a year ago.

On the other hand, local corporations are the only ones that have reduced their debt in this exercise. The city councils and provincial councils closed June with 22,848 million debt , 123 million less than in May but 0.8% more than the balance registered in June 2021.

With regard to the Social Security debt balance , this stood at 99,185 million, two million more than in the previous month. In comparison, in just one year, the debt of this administration grew by 8%, or what is the same, it added 7,330 million to its debt compared to the 91,855 million it had in June of last year.

In this sense, the Ministry has also pointed out “the progress” with the Treasury financing program for the 2022 financial year with which, to date, ” 69.2% of the total issuance program for this year has been executed and 71.7% of the issues in the medium and long term”, they have reported.

At the end of June, most of Spain’s public debt was concentrated in representative securities (1,279,146 million), while the rest was divided into loans (191,177 million) and cash and deposits (5,070 million).

The IMF says that the Spanish debt will become entrenched at 115% of GDP
The Fiscal Monitor report of the International Monetary Fund calculates that the Spanish public debt, which skyrocketed in 2019 to 120% of GDP, is going to entrench around 115% in the coming years.

At the moment, the international organization is correct in its predictions since when the Fiscal Monitor was issued in April of this year, they established that by 2022 the country’s public debt would stand at 116.4%, a figure that is close to GDP ratio obtained at the end of the June financial year.

Therefore, if the IMF’s forecasts continue to come true, the behavior of Spain’s debt will experience slight reductions year after year until it bottoms out in 2027 at 114.6%.

Regarding the deficit, the IMF forecasts also see a stagnation in the medium term for Spain. Specifically, for 2022 it foresees a reduction of up to 5.3% and in 2023 they foresee that there will be another decrease of one point. But, after that, they foresee a stagnation of the deficit in 2027 at 3.9%, one point above what was registered before the Covid-19 pandemic broke out.

At the same time, the IMF cut its growth forecast for this year by 0.8 points in June, to 4% , which is added to another cut for 2023 of 1.3 points, to 2%. . What this shows is that Spain is suffering intensely from both the Covid-19 crisis and the energy crisis, although, despite this cut in growth forecasts, Spain is going to be the European country that grows the most in 2022, with a of annual GDP greater than 4% compared to 2021.