Spain: Government Debt Ratio To GDP Falls For First Time Since Outset Of Crisis

Spain’s government debt ratio to GDP fell at the close of 2015 for the first time since the start of the crisis back in 2008, according to the figures published on Wednesday by the Bank of Spain. This percentage is estimated at around 99% of GDP based on the early figures on the national accounts published by the National Institute of Statistics (Spanish acronym: INE) on 29 January.

The Spanish government noted that should this be confirmed when the final figures are released, it will mean a 0.3% drop on the close of the previous year. In relation to the target notified to Brussels in October last year (99.7%), this final result for 2015 would be lower.

The total volume of government debt stands at 1,069.88 billion euros, 3.5% higher than at the close of 2014 although with a downward trend in its rate of growth. Compared with 7% growth at the end of 2014, the rate of growth during 2015 has been on the decline.

According to the breakdown by public authority, the State increased its outstanding debt in 2015 by 46.72 billion euros, half the amount of the previous year, while the regional governments increased their debt by 23.81 billion euros, slightly higher than the total for 2014. Finally, local authorities reduced their debt levels in 2015 by 3.08 billion euros to stand at 35.25 billion euros.

The debt ratio to GDP shows that the increase in the government debt ratio changed direction for the first time since 2008, the year in which the recession started, which went on until 2013. The increase thenceforth responds to the increase in public debt, the funds allocated to financing regional governments (Regional Liquidity Fund and Supplier Payment Fund), the restructuring of the financial sector and the Spanish contribution to European aid programme for partner countries. This trend changed in 2015 due, above all, to the reduction in the public deficit and improved debt financing conditions.