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Spain’s public debt grows further, hitting highest level since 1909

After taking on another €18 billion, the country’s ratio of borrowing now stands at 100.9% of GDP

The Bank of Spain headquarters in Madrid.
The Bank of Spain headquarters in Madrid. EFE

Spain’s public debt rose in June by €18.549 billion, reaching a total of €1.107 trillion, the highest figure ever in absolute terms. As a percentage of GDP, the ratio of the country’s debt comes in at 100.9%, a record figure that even exceeds the 100.5% seen in March, which was when the ratio broke the 100% barrier for the first time.

Such a figure has not been seen since 1909, when, according to records, debt levels reached 102% of GDP.

Sources from the Economy Ministry say that the figures must be put into the context of the debt calendar

Sources at the Economy Ministry say that the figures must be put into the context of the debt calendar, which can see peaks and troughs due to the differences between emission and repayment dates. The main maturity dates come in January, April, July and October.

Once these factors are taken into account, the ministry says, the country’s growth is seen to be continuing the deceleration that began in 2013, and as such will achieve the target of 99.1% set out in the stability program by the end of 2016. That’s to say, the expected growth in GDP for this year, which will dilute the percentage, should bring the figure down for the second year in a row.

However, the European Commission does not believe that the government will manage to bring the debt ratio down this year. According to its forecasts, it believes that Spain will end the year with debt levels of 100.3% of GDP. But the Economy Ministry insists that the historically low cost of borrowing makes the debt levels sustainable. The intervention of the European Central Bank in the markets has in large part made this situation possible.

Spain’s public debt has seen unstoppable rises since 2009. That year it reached 52.7% of GDP, compared to 39.4% just a year before. It continued to notch up percentage points at a huge speed until it passed the 90% barrier in 2013. That year, in March, it passed the 100% barrier for the first time in more than a century. April saw the ratio ease somewhat, but in May and June it picked up pace once more.

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English version by Simon Hunter.