The state signals ongoing demand for support this year, financed in part by slower but still positive growth after 2023. A new phase aligns with the objective to balance public accounts and publish a target net figure of 55 billion for the current fiscal year. This comes alongside a plan to reduce the burden of outstanding debts. In the upcoming year, gross emissions will still reflect renewals and new obligations, with a projected 257.572 million euros in savings and relief, and an additional 5.577 million euros compared with 2023, driven by adjustments in depreciation and refinancing strategies.
On this point, the new Economy Minister, Carlos Body, stressed that the figures also represent a decline relative to gross domestic product (GDP), about 17 percent, consistent with 2018 depreciation levels at 18 percent of GDP. He outlined the Treasury’s 2024 financing strategy as grounded in prudence and flexibility, underpinned by solid market access and a stable risk premium. This stable premium mirrors strong investor confidence in the economy and Spain’s outlook, supporting operations to weather unforeseen shocks and keep production steady.
The minister noted that lowering debt issuance would help the government meet its goal of reducing the debt ratio. By year’s end, the plan foresees a debt ratio near 106.3 percent of GDP, reflecting a nineteen-point drop from the peak recorded in early 2021. The Treasury also expects gross issuance of short-term securities to rise, with around 84.454 million euros issued—roughly the same level as last year, a year in which issuances widened to extend the life of the existing debt despite some frustration among retail investors.
take the hit
The finances of the state have managed to meet these needs so far, even as interest rates rise and inflation challenges persist. The European Central Bank (ECB) raised monetary rates by as much as four percentage points from mid-2021 to last autumn, yet the average yield on public debt stayed around 3.4 percent (compared with 1.35 percent in 2022 and -0.04 percent in 2021). Consequently, the overall debt service burden remained manageable, with the circulating debt ratio moving to about 2.09 percent. That marks a second uptick after the first increase in a decade in 2022, yet it sits well below the high central bank rates seen elsewhere.
The Treasury has also benefited from a strategy that stretched the average maturity of borrowing during a period of exceptionally low rates before the inflation surge. While the average life of debt was about 6.2 years in 2013, it now climbs toward eight years. This approach keeps annual renewals at roughly 12–13 percent of the outstanding balance, cushioning the impact of rate hikes and absorbing the effects of the ECB’s current adjustments. A robust demand environment further supports the capacity to absorb the end of the ECB’s net lending period.
future challenges
Yet challenges remain. The Savings Bank Foundation (Funcas) projects that the yield on new 10-year bonds will rise this year, making new issues more expensive than those maturing bonds for the first time since 2011. In parallel, the Independent Financial Responsibility Authority (airef) expects the average interest on outstanding loans to continue climbing, reaching a higher plateau in the coming years, with projections around 2.8 percent by 2026.
Additionally, while the debt-to-GDP ratio is expected to ease this year, the absolute debt level is not guaranteed to shrink. The government’s Budget Plan to the European Commission shows debt at 1.64 trillion euros in 2024, or about 106.3 percent of GDP, up from 108.1 percent in 2023. Public administrations’ interest payments are projected to rise from 35.55 billion euros in 2023 to 39.08 billion euros in 2024, equivalent to about 2.5 percent of GDP. These figures underline the need for careful fiscal management as the economy evolves and financing conditions adjust over time [Funcas; airef reports].