"Do not die for the tenth," said Finance Minister Cristóbal Montoro one day after failing to meet the deficit target by more than one point. With still provisional data, the public debt closed 2018 in 97.0% of the gross domestic product, one tenth below the target set, of 96.9%. The figure is, however, a reduction of one point of GDP compared to 98.08% recorded at the end of 2017.
The data is still pending confirmation from the Bank of Spain. The previous year, the Government of the PP lowered it a little less: in nine tenths. And it managed to reach the objective of debt committed to Brussels thanks to an accounting trick: transferred the assets of Enresa, the entity in charge of managing radioactive waste, from the private sector to the public. This increased public assets by two tenths in order to reduce debt, which is always measured in net terms.
In euros, the indebtedness of all the Administrations has set a new absolute record when touching the 1.17 billion, 2.3% more than the previous year. In 2018 the debt increased by 26,536 million euros as a result of the gap between income and expenses.
In fact, in the recent history of Spain, public debt has never fallen in euros. It has only decreased in proportion to GDP. And that has happened thanks to economic growth. While the debt has increased by 2.3%, the gross domestic product has grown including inflation by 3.5%. This difference has allowed the ratio on GDP to be reduced, the indicator that is usually taken to track the evolution of debt because it better measures the ability to repay it. This being the case, this is the fourth consecutive year in which the liabilities over GDP decrease, from the 100.4% that was recorded at the end of 2014.
However, the rate of reduction seems slow. At less than 1 point per year compared to the three points that were reduced to the year between 2000 and 2008. Also because then inflation was higher. In addition, in 2018 there has been the smallest reduction in the public deficit since it began to adjust, back in 2012. Only 0.4 decimals of GDP if the 2.7% deficit provided by the Government is met.
International organizations such as the IMF or the European Commission ask that the favorable conjuncture be used to further reduce the debt. This constitutes an Achilles heel of Spain. Especially for the external one, which continues to rise due to public indebtedness and that when refinancing is the most sensitive to market turbulence. For the moment, however, although the ECB has stopped making new purchases of securities, will reinvest the acquired as it expires, so that it will continue to be the main sole buyer of Spanish debt. Which is keeping the average cost of new emissions at historic minimum levels: 0.64% in 2018. For this year, the target has been set at 95.4% of GDP.