The Government has reduced the net debt needs by 5,000 million euros in 2022, to 70,000 million. The First Vice President and Minister for Economic Affairs, Nadia Calviño, took advantage of the visit to Spain of the European Commissioner for Financial Stability, Mairead McGuinnes, to announce “very good news that demonstrates the confidence of investors in our country”.
Half of the rise in debt in 2020 and 2021 was due to the pandemic and saved 2.7 million jobs
The reduction of the debt objective is especially positive due to the policy of increasing the cost of financing in general that the European Central Bank (ECB) is carrying out to fight inflation. And it reflects the increase in tax revenues above expectations.
The Public Treasury accelerated debt issuance in the first part of the year, before the ECB began raising official interest rates in July. And of the 70,000 million that it will finally place in 2022, 96% has already been closed.
In fact, “the reduction in financing needs will lead to an adjustment of the schedule of scheduled auctions and the suppression of the last auction scheduled for this year,” explained Nadia Calviño.
“In an environment of normalization of monetary policy and since, in the Spanish case, the European Central Bank is no longer making positive net repurchases of Spanish debt, it is necessary to highlight the maintenance at relatively low and stable levels of the credit premium. risk (around 100 points) and the high participation of foreign investments in all our issues and auctions (over 40%), which confirms the credibility of our economy”, added the economic vice president.
The ECB rate hikes (for now 2 points, from the 0% they were in July) and the lower market presence of the institution (at the end of the bond purchase programs of the eurozone states) They are raising the cost of new issues in Spain and the rest of the eurozone countries.
But this rise is slowly being transferred to the average cost of outstanding debt, which is still close to all-time lows. A fact that guarantees the sustainability of our country’s finances and that the annual interest bill will not skyrocket.
This situation is far removed from the debt crisis suffered by Spain and the rest of the peripheral countries of the euro area after the Great Financial Crisis of 2008, despite the extraordinary effort in public spending that both the COVID pandemic and the Russian invasion have forced. from Ukraine. It also allows confidence in the Government’s goal of gradually reducing the deficit [el desequilibrio presupuestario] and the indebtedness [la deuda frente al PIB superó el 120% en 2020 y ya ha caído al 116%].