By the end of 2021, the Social Security system (SSI) held a substantial debt to the state, totaling about 106.177 billion euros. Part of this debt traces back to a series of loans issued between 1992 and 1999, nearly 17.2 billion euros in all, tied to obligations from the now-extinct Insalud as Spain expanded universal healthcare under the PSOE government.
1992-1999: Years of recovery
None of the ten-year loans had been repaid to the state by that point. As the maturities approached, the government at the time took steps to stretch repayments over ten years plus a cancellation window. For some, the process extended until 2027. In August 2020, the Court of Accounts noted in its audit of the institution that there was no justification for keeping this indebtedness in the Social Security balance indefinitely. It suggested that a reasonable period of about 26 years from the initial obligations had passed and urged reform, aligning with the General Administration and the first loan granted in fiscal year 1992 to pursue definitive restructuring. The Court added that if the state had previously covered the costs borne by the system, these loans would not have been necessary, and the Social Security administration would have had to absorb the burden itself. (Attribution: Court of Accounts; General Administration colleagues)
2000-2018: Age of the Reserve Fund
From 2000 to 2009, the SSI did not require new borrowing. In earlier years, a sequence of favorable balances supported the Reserve Fund, a financial cushion created to support pension funding. At its peak, the fund accumulated more than 77 billion euros. Those reserves were subsequently drawn down between 2012 and 2018 to cover pension contributions and, in particular, to meet extraordinary payments. (Attribution: SSI financial records; public audits)
2017-2023: Debt boom
Once the Reserve Fund was depleted, the state continued to finance the SSI’s needs through new loans rather than transfers, covering ongoing deficits. Bank of Spain data show that SSI debt rose from 27.393 billion euros in December 2017 to exceed 106 billion euros by December 2022, marking a substantial increase in reliance on borrowings to sustain pension disbursements. (Attribution: Bank of Spain statistics)
Despite the common perception of high interest expense, the actual cost to the state for servicing this debt has been modest in recent years. Between 1995 and 2009, interest costs totaled about 192 million euros. Since that period, the annual interest outlay recorded under the Social Security’s accounts has been zero. This reflects policy choices on how the borrowing portfolio has been managed and the timing of repayments relative to the state treasury. (Attribution: SSI financial disclosures; public sector accounts)