The debt of the Public Administrations rose to 1,637 trillion (billions) in September, which represents an increase of 3.7% compared to the same month of the previous year and 0.8% compared to August. The data means that the State’s ‘debt’ once again reaches a historical maximum; Until then, nothing new.
However, if the comparison is taken with GDP, which is the relationship traditionally made to measure debt, the debt/GDP ratio stands at 104.4%, which represents a moderation with respect to the figure of the second quarter, which was 105.3%.
The debt-to-GDP ratio is important because it measures the financial leverage of an economy. (the ability to finance itself with its own resources) and is one of the values used by the European Union to measure the financial health of economies, although given the circumstances That 60% maximum that the community authorities set as a convergence criterion already seems like a very distant objective.
The moderation of debt over GDP that was achieved in September is mainly due to the growth of the Spanish economy. We must remember that a few days ago the International Monetary Fund (IMF) revised its growth expectation for our country this year upwards to 2.9%. However, and as has already been advanced, beyond this the truth is that the debt continues to skyrocket, mainly due to the combination of increased spending that followed the Pandemic and the war in Ukraine and lower income.
De Guindos warns of a “vicious circle”
Precisely, in a speech today at the Frankfurt economic forum, the vice president of the European Central Bank (ECB), Luis de Guindos, has warned that although the aggregate debt/GDP ratio of the euro zone has decreased considerably from its maximum level during Pandemic, debt levels remain high in many countries due to persistent primary deficits.
The debt-GDP imbalance may limit governments’ ability to maneuver to support the economy and make additional investments, which could lead to a “negative vicious circle”, said De Guindos, between low growth and sustainability of the economy. sovereign debt.
City councils, the most sustainable
Of these 1,637 billion that Spain owes, 1,490 (+5.4% in interannual terms) correspond to the central State; 37 billion (-9.9%) to what the Bank of Spain calls ‘Other Central Administration Units’ (Sareb or Frob, among others); 116 billion (+9.4%) to the Social Security Administrations; 334 billion (+2.5%) to the Autonomous Communities; and 23 billion (-0.2%) to city councils.
Regarding the growing Social Security debt, we must remember that this organization faces an unresolved and growing sustainability problem which until now has been corrected thanks to the loans granted by the State to pay pensions.
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