For the first time since 1909, Spain’s public debt has surpassed 100% of its economic output.
Figures released by the Bank of Spain on Wednesday show that the state now owes more money than the wealth generated by the Spanish economy, which is growing but not at a fast enough clip to cover its payment commitments.
First-quarter data show that public administrations have accumulated debt worth €1.095 trillion, up from €1.070 trillion by the end of December last year.
This situation is not exclusive to Spain. Italy’s debt-to-GDP ratio is close to 130%
While official GDP figures for the January-to-March period have not been released yet, preliminary numbers show that output grew 0.8% from the last quarter of 2015. For the debt-to-GDP ratio to be lower than 100%, economic growth should have been 2.2% instead.
This low growth estimate evidences that public debt is now in excess of 100% of GDP.
Another reason for this high ratio is the fact that public debt rose significantly in February and March. In just 31 days, another €14 billion were added.
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This situation is not exclusive to Spain. Italy’s debt-to-GDP ratio is close to 130%. But Spain had not experienced it for over a century.
A study by the International Monetary Fund (IMF) shows that the highest ratio experienced by Spain was 160% in the 1880s.
English version by Susana Urra.