Spain will issue less public debt this year than originally planned. Specifically, 5,000 million less than planned (from 70,000 to 65,000 million euros) of the Public Treasury in its annual strategy, as announced by the first vice president of the acting Government, Nadia Calviño, who assured that this is a sample of the “stability” of the Spanish economy during the interest rate hike.
“Spain has consolidated itself as one of the main promoters of progress,” said the vice president of Spain, who said that the Spanish economy “comfortably met its deficit forecasts and goals. ”
Calviño made this statement when he arrived in Luxembourg, where he will participate this Monday in a meeting of the Ministers of the Economy of the Eurozone after sending the budget plan for 2024 in Brussels where he maintained the growth expectation of 2.4 %. decreased the next year to 2%.
“We will continue to take advantage of the growth to reduce the debt,” Calviño said, despite the reduced forecasts. Spain’s commitment is to reduce the debt ratio to 108.1% of GDP by the end of this year, “in one year’s progress the goal is to put it below 110% of GDP”, according to the budget plan.
The intention is that this ratio will fall to 106.3% next year, far from the 60% goal included in the EU Stability and Growth Plan, which is suspended, but which will be reactivated in 2024. Of course, the proposal for new rules in fiscal negotiations with European partners suggests intermediate goals for debt reduction.
Interest costs hardly go up
Debt/GDP is the primary measure of a state’s debt sustainability. But he’s not the only one. Public spending on interest should also be observed, especially in the context of rising interest rates like the current one.
The Government’s own Budget Plan that must be approved by Brussels indicates that “the interest expenditure for 2023 is predicted to maintain the weight of the GDP of 2.4% where it closed in 2022, although in the levels it increases compared to last year.”. It predicts that in 2024 it will grow by just one-tenth, “up to 2.5% of GDP, as a result of the progressive transfer of higher interest rates by the European Central Bank (ECB) to the Spanish public debt.”
What Spain aspires to achieve in the Stability and Growth Plan by 2024 is the commitment to reduce the deficit (the imbalance between income and expenditure covered by debt) to less than 3% of GDP.