The state treasury has accelerated debt placement in the first quarter of the year, already reaching 40% of its 2022 financing target. The institute has issued bonds of € 29,000 million, out of a net of € 75,000 million planned for Anus. The rate meets expectations of a general tightening of monetary policy to overcome the peak of inflation, with interest rates rising in the coming months and the Bank of Europe (ECB) gradually phasing out its emergency debt repurchase program. , Designed as a response to the COVID crisis.
According to the latest monthly statistics published by the Treasury, Spain continues to enjoy the unbearable funding conditions it enjoyed in early 2022, despite delays caused by the war in Ukraine, both in energy prices and in general economic activity. And government plans. The executive had to approve shock measures involving higher government spending (in short, more money with a narrow fiscal margin after two years of uncertain deficit).
In March, new bond yields remained at 0.255%, up from an average of 0.389% in 2022, after rising to 0.635% in February. Very low interest rates, which allows the state to continue to reduce the average value of all debts to the historical minimum of 1.55%.
In this context, Spain maintains its annual debt interest rate slightly above 2% of GDP, which is far from the levels reached during the debt crisis that ended in 2012 with the bank surviving.
“Government funding needs need to be met without problems, which has helped the ECB with its procurement, abundant liquidity and low interest rates,” said a team of economists at Caixabank Research.
Public debt, by volume, is approaching 118% of GDP. And “40 percentage points are in the hands of the ECB,” the bank said. It is the decisions of the institution chaired by Christine Lagarde regarding the terms of funding for Spain.
As of April, there is no longer an ECB emergency debt repurchase program (under certain conditions from European countries and companies) that allows for a contextual rate hike for both Spain and the eurozone as a whole, even in the worst of times. Pandemic.
Now is the old program and the recent investment reinvestment deadlines that the ECB is also opening up to deplete the bond market money and, in theory, to curb uncertain inflation by reducing excess liquidity. Which avoided financial shock despite COVID.
“Given the evolution of the data and the macroeconomic environment, the ECB will either complete net purchases. [de este programa convencional] In the third quarter, he will either increase them and / or extend them over time, ”explains Ricardo Murillo, Caixabank economist.
“In addition, he changed the temporary connection between the first increase in interest rates [oficiales, que están en el 0%] And the end of net purchases [sin tener en cuenta la reinversión de los vencimientos]. Until then, net debt purchases must be completed shortly before the first rate hike [oficial]”Now the ECB expects the first increase after some time after the completion of procurement,” – added the expert.
Spain’s deficit (the difference between government spending and debt-covered income) eventually stood at 6.9% of GDP in 2021, “improving by 3.4 percentage points from 2020”, according to Moody’s’s debt rating agency. The target of the government’s 8.4% deficit.
“All administrations have seen improvements in finances, including the most important ones in terms of social security. “These better-than-expected fiscal outcomes were largely due to strong economic recovery and improved labor markets,” he said. Moody’s.
“Spain’s high public debt remains a challenge,” he said. “This year we expect the deficit to remain at 6% of GDP as the economy grows at a slower pace and energy price shock mitigation measures affect both government spending and revenue (although, according to the government, the improvement in fiscal outcomes gives way to its national response.” For the plan) “, adds the rating agency, which concludes with a forecast that” debt will fall to about 117% of GDP in the face of the close of 2022 and will continue to gradually decline to 116 “. % By the end of 2023. ”
However, according to the agency, “even weaker growth and energy cuts, which have continued over time, could put pressure on public finances and reduce the risks to our forecasts for fiscal balance and debt.”
Source: El Diario
I am an experienced and passionate journalist with a strong track record in news website reporting. I specialize in technology coverage, breaking stories on the latest developments and trends from around the world. Working for Today Times Live has given me the opportunity to write thought-provoking pieces that have caught the attention of many readers.
