The debt closes the year at 97% of GDP, one tenth above the target

The debt closes the year at 97% of GDP, one tenth above the target

In just one year the indebtedness of the public administrations increased by more than 26,500 million euros to a total of 1,17 billion

  The data provided in the debt objectives of the Budget project were not far from reality. The Government estimated that the indebtedness of the public administrations reached 96.9% of the GDP at the end of the year, and the data published this Friday by the Bank of Spain (BdE) place it only one tenth above, by 97% .

The figure is due to the increase of 1.737 million (0.14%) over the month of November, which in total means that in just one year the debt has risen by 26,536 million euros to touch the 1.17 billion .

  With these very high figures, it is complicated to reduce the debt to 95.4% of the GDP that the public accounts -although they will not enter into force- collected as a target of 2019.

With this level of indebtedness, Spain faces a possible rate hike from the European Central Bank (ECB) in a position of weakness , not having taken advantage of the years of economic growth to reduce the liability. Financing will be more expensive when interest rates rise.

Indebtedness of Social Security
By administrations, at the end of the year the State increased its debt by more than 3,700 million and already exceeds one trillion euros, which basically explains the increase in public debt last year. The communities reduced it by 221 million compared to November, a very positive figure after the rise of that month. In interannual rate they increase their indebtedness to more than 292,000 million, 1.5% more.

The municipalities continued to cut debt, in this case 381 million, putting its total environment figure to 26,000 million, 10.5% less than last having managed to reduce its debt more than 3,000 million throughout 2018 year.

But the biggest increase was recorded in Social Security , which continues to maintain the level at 41,200 million euros to increase more than 13,800 million only during 2018. Thus, in just one year its indebtedness has grown by 50.3% for loans of the State to pay pensions .

This same Thursday the Independent Authority of Fiscal Responsibility (AIReF) showed its concern in its last Observatory of debt that revealed that in a scenario in which no measures are taken that neutralize the cost of raising pensions according to the CPI, the pressure on the Expenditure would imply an increase in public debt of about 50 points over GDP in 2048. That is, the debt would rise to 130% of GDP , more than half a million euros if the GDP value of 2018 is taken into account.

This large increase in spending is mainly due to the fact that starting in the 2030s, pensions will rise considerably because the baby boom generation will begin to retire . In the medium term, in a scenario in which the policies remain the same, the debt would stabilize at 90% of GDP until 2030, and will grow since then, the text says.