The debt grows 146.000 million and touching its highest since 1910

Source: IMF and homemade. / COUNTRY

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The Government and the Bank of Spain have already figures in his power. And they are chilling. The Spanish public debt broke records in 2012. In the first year of the Government of Mariano Rajoy, the passive - measured according to European criteria - volume soared to 882.300 million euros, according to official sources. This means that you increased in a single exercise in 146,000 million. 400 million debt more each day. Never in the economic history of Spain the debt of public administrations had increased so much in a single year. 2012 Increase small leaves even the 2009 year blacker José Luis Rodríguez Zapatero stage for public debt. In five years, the debt has increased by 500 billion and turns this into one big ballasts for the recovery of the Spanish economy.

The increase in public debt in 2012 is the equivalent of more than 14 points of the gross domestic product (GDP). The National Institute of statistics (INE) has not yet published the figure of GDP last year, but using public and private estimates, those 882.300 million debt equal to 83.5% and 84% of the GDP. The Government had forecast a ratio of 79.8% in the overall budgets for 2012, presented last July which, in developing those of 2013, revised the figure upward and became feared by 85%. In relative terms, higher is the level of debt in more than one century, specifically from the year 1910, when the Spanish debt stood at 88% of the GDP, according to the historical series published by the IMF. At that time, Spain topped up the crisis of 1898, in which the costs of the war with the United States and the loss of the colonies took the debt above 100% of GDP. "The problem with this level of debt is that you submit to the tyranny of the market expectations: not only increases the interest payments, which are eaten much more part of their budgets, but it also returns to a country more vulnerable to changes in interest rates." And the market can happen considering you solvent to insolvent from one month to another single only because of a change in expectations,"warned from London Antonio Garcia Pascual, Chief Economist for the South of Europe, Barclays Capital, whose service of analysts forecast a debt burden in GDP close to 95% in 2015.

The Bank bailout and the payment to suppliers raise the debt

Several factors explain the record of last year debt increase. Most are due to the public deficit. Despite the cuts and tax rises, the Government of Mariano Rajoy has been unable to significantly reduce the gap in the public accounts. Although communities and municipalities have Yes reduced it somewhat more, deficits remain the main cause of the increase in debt. But that there are, above all, three other factors. On one hand, the rescue of Spain to recapitalize banks. The Government has requested nearly 40 billion in 2012 to its European partners to inject BFA-Bankia, CatalunyaBanc, NCG Bank and Banco de Valencia and to inject money in the bad Bank, which has resulted in December 2012 to be the month of the history of Spain in that debt grew more. Second, is the plan of payment to suppliers, which has led to that debt before not computing (invoices unpaid) pass counted as debt. Third, the debt also grows by the share allocated to Spain of loans for bailouts of Greece, Portugal and Ireland.

Although the great protagonist of the increase in debt is the central State, the Bank of Spain not publish figures with the breakdown by authorities until March 15. Liabilities in circulation of the State now exceed the billion euros and probably 100% of GDP at the end of the year, but there are more than 100 billion of debt in the hands of other administrations (by the Fund subject to Social Security, the payment to suppliers and the regional rescue, mainly). That circumstance and other settings reduce the debt measure according to the Protocol of the excessive Deficit to the above 882.300 million. In that number not listed about 60 billion euros of debt that have public enterprises.

It is not the still photo of this volume of that debt most alarming, but the context underpinning it - with six million unemployed economy suffering its second recession in four years--and his meteoric rise: before the crisis, in 2008, it was less than half (36.3%) and the Government plans to reach 90% in 2013. For Emilio Ontiveros, President of international financial analysts (AFI), "the main problem is the payment of interest, because it is the most unproductive game of expenditure possible and occurs in a country that has had to cut back in other areas and needs to restore growth".

Gross liabilities exceed the billion euros and are around 100% of GDP

Spain had never spent so much money to pay only the interest on its debt: 38.660 million EUR is what collected for this year the overall budgets of the State (PGE), 33 percent more than the budget for last year. These financial expenses exceed for the first time in history that the Government intended to staff costs chapter. "When GDP grows, that level of debt is palatable, but in recession it is worrying: If you don't grow, you can not pay your debts", says Ontiveros, who defends that Spain had asked the bond-buying program prepared by the European Central Bank (ECB) to reduce the interests paid by the Spanish debt markets, a mechanism for which before the Government should ask rescue its European partners. "The corollary of this is that Spain urgently needed measures to reduce this spending," he says.

The interest environment that pays the debt of the State is 4.1% with an average of 6.1 years maturity, but this level of profitability that investors demand can grow by the economic downturn. Despite the truce that the markets have given to Spain, interest recovered by the political tensions in Spain and Italy.

José Carlos Díez, Intermoney Chief Economist, warning that Spain fails in all the variables that serve to stabilize the debt: its economy does not grow, pay a high interest rate and has primary deficit (the prior to the payment of interest on the debt). If not it redirects your situation, this "is a dynamic that just leading to defaults" reflects.

Finance; Economic; Business

Finance; Economic; Business

Title Post: The debt grows 146.000 million and touching its highest since 1910
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