Spain’s debt will surpass France’s in 2024 for the first time since 2012, according to the latest projections from the International Monetary Fund (IMF). The perspectives of the International Institute indicate that the public debt of our country will decrease until it remains below 110% of GDP (gross domestic product) in 2025, while the debt of the neighboring country will eventually increase to 115%. of the same exercise.
In 2023, Spain’s debt ratio will remain at 112.1%, and France’s at 112%, according to these IMF expectations. In 2024, they will be 110% and 113%, respectively, and in Italy it will approach 145%. Spain’s debt reached 120% in 2020 due to the impact of the pandemic, while on the other side of the Pyrenees it remained at 115%.
Spain’s 2022 figure is 112.8% lower than the macroeconomic table on which the current general government budgets are based, which has already gone ahead of last year’s target of 115.2%. with a more intensive growth of GDP than expected. Namely, 5.5%, according to INE progress, after another 5.5% in 2021.
The International Monetary Fund itself is convinced that our country will continue economic growth in the Eurozone in the coming years. And this is the main reason why Spain will manage to lower France’s debt, one of the most important coefficients for assessing debt sustainability.
This is a key issue in the height of the official interest rates of the European Central Bank (ECB) and therefore the height of the cost of funding in general (mortgage, business loans and treasury bills). It coincides with the debate about new European Union (EU) tax rules.
This Monday, Nadia Calvino, First Vice President and Minister of Economy, defended that “a rapid reduction of public debt and deficit will be achieved. [el diferencial entre los ingresos y los gastos del Estado]”, but in a way that is “compatible with economic growth and job creation”.
Calvino draws comparisons with the period of austerity that followed the debt crisis from 2010 and the cuts to spending and public services a decade ago, which meant a painful crisis for families. With wounds that have not yet closed, for example, in public health or in purchasing power, which has suffered another historic blow in the current inflationary crisis.
Last week, the Deputy Vice President, Secretary of State for the Economy, Gonzalo García Andres, indicated the same direction in other words: “We are going to improve our targets, both for the deficit and by expanding the public debt base. Revenue, not tax increases.
“Revenues in relation to GDP have increased by three points because the base supporting the tax burden has increased: there is more employment, less underground economy…” he continued. “Nevertheless, progress must be made to bring government revenue levels in line with the eurozone average and to finance the welfare state,” he concluded.
In addition to debt, another key ratio to measure debt sustainability is annual income tax to GDP. That is, not only the amount of debt that each country has, but how much is paid in it.
That burden or cost on public debt would be 5.5% in Spain and 3.5% in France, according to data compiled by Moody’s rating agency for each state budget. This higher bill is about reducing our nation’s deficit and debt.
New tax rules
This Monday, Nadia Calvino assured that Portugal and Spain could provide a significant boost to find the balance they need as they try to close a deal on the EU’s new fiscal rules in the second half of the year.
“We cannot delay. We cannot put this aside. We cannot automatically return to the old rules that we used before the pandemic, because we have not really used them in such a way that they did what they were theoretically intended to do,” said the vice president at a meeting with the Portuguese organized by the Elcano Royal Institute. Minister of Finance Fernando Medina.
According to Calvino, there is unanimous agreement that EU countries are not in the same situation or in the same context as before the pandemic, since the debt-to-GDP ratio has increased in all states due to the impact of COVID. -19. “Therefore, in this regard, there is a different approach to setting goals and automatisms,” he emphasized.
The government’s economic officer noted that there is also consensus that new fiscal rules must be created that are adequate in the sense that they guarantee that countries continue to reduce deficits relative to GDP in a growth-compatible manner. Job creation and public investment.
Similarly, according to Calvino, there is also a unanimous agreement not to return to “the old trenches that divided and created a gap” and divisions between “North and South, big and small, new and old Member States, East and West”.
Source: El Diario
