It adds more than 11,500 million euros in just one month and complicates the government’s consolidation target
There is no ceiling. Public debt continues to rise in absolute terms in positions and is greatly complicating the government’s consolidation targets at a time when, moreover, the pace of the economic recovery is starting to slow down.
According to preliminary data from the Bank of Spain, government debt, measured under the Excessive Deficit Protocol, is said to have risen from EUR 1.475 billion in June to a new record of EUR 1.487 billion in July, growing at 5% year-on-year.
The data has grown by around 11,600 million euros in just one month. And if the comparison is made with a year ago, the difference is about 70,800 million euros.
The numbers are historic. But they could paint even worse. And it is that inflation has become the great ally of the government to meet the objectives of gradually reducing the ratio that, according to the stability program sent to Brussels, to close this year at 115.2% of GDP to 109.7% of GDP. GDP in 2025.
The key is in the GDP deflator and the difference with real growth. To understand it with an example, producing 5,000 more tomatoes from one quarter to the next is not the same as what those extra tomatoes cost now due to the rise in prices. In other words, with the effect of inflation, nominal GDP is ‘inflated’ by the price increases, improving the final debt-to-GDP ratio.
In fact, in the Stability Program itself, the Executive acknowledges that “nominal growth will be the determining factor in reducing government debt by an average annual contribution of 5 pp between 2023 and 2025.”
The increase in the debt in July was mainly due to the growth of the government debt, which, due to the impact of the crisis, had to require an extra spending effort, as well as that of local corporations. In concrete terms, the government debt amounted to 1,307 billion euros in July, 12,929 million more than in June. Compared to a year ago, that figure is 6.8% higher.
For their part, the Autonomous Communities reduced their debt by 0.7% in July compared to the previous month, to EUR 314,321 million, but increased by 1% compared to July 2021.
Finally, the debt of the social security administrations remained stable in the seventh month of the year, at 99,184 million euros, only one million less than in June. However, the figure is still 8% above a year ago, partly as a result of the loans the state has provided to finance its budget deficit.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
