Spanish public debt remains below 100% of GDP for the second consecutive month

BarcelonaSpanish public debt remains below 100% of GDP for the second consecutive month, a fact that had not occurred since the outbreak of the pandemic. After the State managed to position itself below this psychological barrier last July, the latest data from the Bank of Spain confirm the downward trend. According to the estimates released this Wednesday, Spanish public debt at the end of August would be at 99.7% of gross domestic product (GDP, the indicator that shows the size of an economy), two tenths below the ratio recorded in July and 3.1 points less compared to August of last year. In absolute terms, the liability of the public administrations as a whole would rise to 1.75 trillion euros at the close of August, 2.9% more in year-on-year terms.

The evolution of public debt advances the achievement of a goal that the Spanish government planned to reach by the end of 2027. According to the central executive's calculations, it was expected that the public debt ratio would fall below 100% of GDP during the second half of next year. With the new updated figures, the Spanish government now calculates that Spain will close 2026 with a debt for the public administrations as a whole equivalent to 99.3% of GDP.

Despite the downward trend of recent years –in 2020 it reached highs, with debt nearing 120% of GDP–, Spanish metrics are still far from the fiscal rules set by the European Commission, which stipulate a debt ceiling of 60% of GDP. Under the new framework, however, Brussels tolerates that countries with debt exceeding 90% –six out of a total of 27– follow strict plans to reduce liabilities progressively. Given this situation, Spain has committed to achieving a debt ratio of 90% by the year 2031. Although the central executive's plan promises a downward path for the coming years, it does not specify when it expects to reach below the lower levels of 60% set by the European Commission.

Debt by administration

The bulk of the liabilities corresponds to State debt, which at the end of August –according to the estimated calculations of the Bank of Spain– stood at 1.598 trillion euros, 3.3% more compared to the same period last year. For other units of the central administration, the balance was 31 billion euros, a figure that represents a reduction of 8%, while the liabilities of the Social Security administrations increased by 7.9%, to 136 billion euros.

The debt of the autonomous communities also increased by 2.5%, reaching 349 billion euros. Conversely, the liabilities of the municipalities decreased by 7.1%, dropping to 21 billion euros.

Regarding maturity, securities representing long-term debt –which account for 84% of the total debt of public administrations– grew by 2.5%, to 1.474 trillion euros. Securities with a maturity of less than one year also grew, with an increase of 25.5%, to 91.62 billion euros. Public administration loans with a maturity of more than one year, on the other hand, were reduced by 3.7%, dropping to 173.15 billion euros.