Spain’s public debt soars

Spain National Debt
Crushing debt stifles Spanish growth

The Bank of Spain have released data showing the Spanish government debt rose to 68.5% of GDP in the fourth quarter of 2011, the highest in at least 16 years.

Bank of Spain records, which have been kept since 1995, show a previous high of 67.4%.

Total public debt reached 734.96 billion euros at the end of the year, up from 61.2% at the end of the previous year.

The debt is 8.5 points above the EU agreed limit of 60% of GDP, but still below the average across the eurozone members.

A debt of 67.2% had been forecast by Jose Luis Zapatero’s socialist government before they were defeated in November elections.

Other forecasts were not so optimistic with Eurostat forecasting a public debt of 69.6% in 2011, 73.8% in 2012 and 78% in 2013.

Spain’s public debt has risen to such levels due to annual public deficits that have over-shot EU targets, partly thanks to over-spending by regional governments, and also rising unemployment benefit bills.

Public debt ratio has grown uninterrupted since 2008 when the property bubble burst. At that point public debt was almost half what it is today at 35.8% of GDP.

Spain’s autonomous regions have a combined public debt of 140.1 billion euros, a record 13.1% of national GDP, representing a 1.7% increase compared to a year earlier.

However, municipal debts fell slightly over the year to 35.4 billion euros or 3.3% of GDP. The municipality with the highest debt is Madrid, with 1.035 billion euros in pending payments.

The mayor of Madrid, Ana Botella, says the total consists of pending debts of 920 million euros, plus a further 115 million which is owed to state-owned companies.

The central government’s debts also increased in 2011 to 52.1 percent of GDP at the close of 2011, an increase of 5.7% from a year earlier.