In October, Spain’s total public debt stood at 1.572 trillion euros, a figure that underscores ongoing pressure on the government’s balance sheet even as the euro eased by 0.3% month over month after peaking in September. This snapshot, released by the Bank of Spain on a Wednesday, shows a debt level still historically high but slightly lower than the month before.
Although October marks the second-highest debt total in Spain’s historical series, it remains just beneath the all-time high reached in September at 1.577 trillion euros. For the year, debt has climbed 4.9%, equivalent to about 74.124 billion euros, driven by weaker revenues and higher spending that trace back to the pandemic, the war in Ukraine, and persistently rising prices.
For this monthly preview, the Bank of Spain does not publish debt as a percentage of GDP. The latest third-quarter data, released earlier, show the debt-to-GDP ratio at 109.9%. Government projections, however, point to an improving trajectory. With an expected economy growth of 2.4% in 2023, the debt-to-GDP ratio is forecast to ease to around 108.1% in 2023, moving toward the goal of dipping below 110% on an annual basis.
Forecasts from the Manager indicate a continued downward path for public debt in the coming years, slipping to about 106.3% and then to 105.4% in 2024, remaining at 105.4% in 2025, and easing further to 104.4% in 2026.
The debt of the State and municipalities against the Autonomous Communities shows divergence
The October decline in overall debt is mainly due to reductions in State and local government borrowings. At the same time, autonomous communities increased their debt for the tenth time this year, while Social Security’s debt stayed largely flat.
State debt for October was recorded at 1.409 trillion euros, a 0.2% decrease that translates to a reduction of about 2.981 billion euros from September. Over the previous twelve months, state debt had risen by 6.6%.
Meanwhile, autonomous communities raised their borrowings to 323.618 billion euros in October from September, an increase of roughly 3.694 billion euros, or 1.2%. This segment also reflected a year-on-year recovery of around 2.4%.
Social Security debt remained steady at 106.170 billion euros in October, just two million euros below September, yet still at historically high levels, up about 7% over the last twelve months. The Bank of Spain notes that the debt linked to Social Security has grown due to loans taken in the past year and then transferred from the State to the General Treasury to help finance the budget imbalance.
Lastly, the debt borne by municipal councils fell by 1.3% in October compared with September, totaling 22.938 billion euros, while the year-over-year change stood at 0.8%.
These figures feed into a broader dialogue about Spain’s fiscal trajectory. They capture the delicate balance between stimulating growth and maintaining sustainable debt levels, a theme policymakers will continue to monitor as macroeconomic conditions evolve. The Bank of Spain’s monthly update offers a granular look at how debt is distributed across different levels of government and highlights where fiscal pressures are most acute. The ongoing discussion centers on whether the debt-to-GDP ratio can trend toward the government’s targets amid a still-uncertain global environment. (Bank of Spain)