The Bank of Spain published on Friday the latest data on the public debt of all Administrations. In total this debt totaled 1,175,856 million euros in January, representing an increase of 2.6% over the same month a year ago. This amount is equivalent to 97.1% of GDP, compared to 97% with which this indicator closed 2018.
This increase - which the Ministry of Economy was quick to point out does not represent an upward trend in the debt - is marked by a new rebound of 3.8% year-on-year of the State debt and 1.7% of the autonomous communities , which represent the bulk of this liability. While what was owed by the municipalities continued to fall, as usual in recent years, to 25,789 million euros, 11% less than a year ago.
Along with the evolution of these figures is a public debt item, on which the Government has no plans, and which grows at a dizzying pace: that contracted by the Social Security with the State, for the payment of pensions fundamentally. The figures are stubborn and indicate that last January Social Security owed the State 41,193 million, 50.5% more than a year ago, when this debt was 27,363 million.
The amount of the current debt consists of just over 17,000 million that the State loaned to the Social Security in the early nineties to pay for outstanding spending obligations of the Insalud and other health expenses, which depended on Social Security until 1996 To these loans that have not been settled since then by decisions of the successive governments, two loans granted by the Treasury to the system are added since 2017 to pay the extra Christmas and summer pensions payments for a joint value of something more than 24,000 million.
But, in addition, to the current debt (41,193 million) it will be expected to add at the end of the year 15,164 million more than the Treasury will again lend to Social Security to finance the extra payments.
With this, Social Security could end the current year with a debt with the State of more than 56,300 million. Or, what is the same: Social Security owes the State more than double what is owed by the city councils, which will surely cut their debt below 25,000 million euros.
Likewise, the loans contracted by the pension system at the end of this year imply that Social Security owes almost half of all that it receives in a year for the payment of social contributions by employers and workers. Thus, 123,584 million is the forecast of revenue by installments for 2019, provided that an increase of 7% per annum is met, something that different analysts have questioned.
How has this situation been reached? The scourge of the crisis on employment - which accounts for eight out of ten euros that the pension system enters through contributions - has meant that governments have spent, since 2011, almost the entire reserve fund of pensions for pay for the successive annual deficits. Although in 2017 the recourse to this fund was not enough and the Executive had to request the aforementioned loans.
In the reserve fund there are only 5,000 million left - out of the 64,000 that came to be in 2011 - and different estimates estimate that Social Security will repeat in 2019 a deficit of around 18,500 million. Therefore, it will be necessary to withdraw some 3,000 million more to complete the Treasury loans.
Far from having addressed this situation, the Socialist Executive has not taken any action to address this situation. On the contrary, it has maintained spending commitments made by the PP and added new ones that have led to the monthly payroll of pensions to have risen by 7.5% per year to 9,563 million last February. This increase in spending is compounded by the absence of containment measures aggravated by the suspension of the revaluation and sustainability factors agreed at the last minute by the PP to move forward the 2018 budgets and which were ratified by the PSOE.
However, the serious financial situation of Social Security, whose numbers are growing at an exponentially unsustainable rate, would require an immediate action plan that contains spending and increases income, something even more difficult after the breakdown of consensus within the Pact of Toledo, where all the parliamentary groups tried to agree on the guidelines to reform the system and make it sufficient as well as sustainable.