STATE FINANCES

Crisis causes public debt ratio to double since 2008

Figure hit 72.1 percent of GDP in the first quarter

The economic and financial crisis that has gripped Spain since 2008 has seen its public debt levels double in four years to historically high levels.

According to figures released Friday by the Bank of Spain, the levels of indebtedness of the country’s public administrations as a whole climbed 13.2 percent in the first quarter of this year from a year earlier to 774.549 billion euros, equivalent to 72.1 percent of GDP, compared with 35.5 percent in the same period in 2008.

That was the highest level since the Bank of Spain started to compile the current series in 1990. But according to IMF figures on member countries, the level of debt is the highest since 1913, when it stood at 76.7 percent of GDP. The highest of all time was in 1880 when it reached 162 percent of GDP.

The rapid rise in Spain’s debt levels in the past four years on the back of an accumulation of hefty annual deficits is the main reason behind the growing concerns of investors about the country’s solvency.

The situation is expected to get worse before it gets better. The loan Spain has asked its partners for to clean up its banks — expected to amount to up to 100 billion euros — will drive debt levels up to around 90 percent of GDP, the main reason behind Moody’s Investors Service’s to cut Spain’s sovereign rating to close to junk, combined with weak growth prospects.

The rapid growth in Spain’s debt levels over the past few years has been due mostly to the country’s regions. Over the past year, their debt climbed by 19.736 billion euros, or 15.7 percent. Their combined deficit last year amount to 3.3 percent of GDP, more than double the target set them of 1.3 percent.

The most indebted region is Catalonia whose debt amounts to 21 percent of GDP, followed by Valencia with 20.2 percent, the Balearic Islands with 16.7 percent and Castilla-La Mancha with 16.6 percent.

In absolute terms, Catalonia owes 42 billion euros, Valencia 20.832 billion, Madrid 16.572 billion and Andalusia 15.373 billion.

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