February 24, 2021

The pandemic shoots debt to a record close of 1.3 trillion in 2020

The effects of the coronavirus pandemic have triggered public debt to 1.3 trillion euros in December 2020, 117.1% of GDP, the highest figure recorded at the end of the year in the entire historical series.

The provisional data advanced this Wednesday by the Bank of Spain point to an increase in debt in the year of 122,439 million, 10.3%, which places the total figure at 1,311,298 million in December, the highest for a year-end and only surpassed by November (1,312,590 million).

Despite the magnitude of the increase, the Ministry of Economic Affairs has emphasized that the good performance of the economy in the second half of 2020 has allowed the debt to be placed 1.7 points of GDP below the forecast in the last macroeconomic table ( 118.8% of GDP) and even the estimate for 2021 (117.4% of GDP).

“Reality confirms the prudence of the Government in all its forecasts”, highlighted the Vice President of Economic Affairs, Nadia Calviño, during her speech in the Plenary of the Congress of Deputies, while highlighting “the good performance of the Spanish economy and the excellent management of the Treasury of the Kingdom of Spain “.

Calviño has described as an “artificial and sterile” debate the proposals for the European Central Bank (ECB) to forgive public debt of the States due to the crisis of the Covid-19 pandemic.

If the data advanced by the Bank of Spain is confirmed, the debt would be below the estimates of organizations such as the International Monetary Fund (118.2% of GDP), the OECD (117.3% of GDP) or BBVA Research ( 118.9% of GDP), although above those of the Bank of Spain (116.7% of GDP).

Behind this historic rebound are the serious economic consequences of the pandemic and business closures, which have increased health care and social protection expenditures while sinking tax revenues.

Greater impact on the Central Administration

Most of this impact was concentrated in the Central Administration, which, as Economic Affairs recalls, has assumed a large part of the direct aid to workers, families and companies and measures such as temporary employment regulation files (ERTE) or the benefit for cessation of activity for freelancers.

This, together with the 16,000 million allocated to the COVID-19 fund for autonomous communities, led the State to end the year with a debt of 1,166,098 million, 110,980 million more than a year earlier.

In 2020, the debt of the autonomous communities also increased -by 8,372 million, to a total of 303,452 million- and, above all, of Social Security, which reached 85,355 million after a rebound of 30,331 million, more than 50%.

Local corporations, on the other hand, closed the year with a debt of 20,011 million, 1,220 million less. At the end of 2020, most of the debt was in debt securities, especially long-term (1,055,542 million), although also short-term (77,497 million), while the rest was distributed in loans (173,301 million ) and cash and deposits (4,959 million).

The economic analyst and professor at EAE Business School Juan Carlos Higueras has warned that the indebtedness is not due only to the pandemic, but also has a structural component, for which “we have got into debt in 2020 at a rate of 336 million euros every day and the worst thing is that we continue and we will continue to do so, at least for the next 10 years. ”

In the same vein, the economics professor at OBS Business School Albert Guivernau has pointed out that “the level of debt is not as relevant as that for” because “if the indebtedness does not serve to boost productive investments, this figure will not cease. increase”.


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