Spain’s public administration debts reach record high 

Economically, Spain has been one of the hardest-hit countries in the pandemic. The country is heavily dependant on tourism, and, in 2020, only 18.3 million tourists visited, compared with 79.2 million in the previous year. This meant a 78% increase in income in the industry. 

Now, a new report shows that the total debt of Spanish public administrations with their private suppliers has reached an all-time high at €83 billion, which is over 39% higher than in 2016. 

This news has prompted the confederation of Spanish Small and Medium Enterprises (Cepyme) to call on the government to act quickly to address this problem. It says that 300 companies are being forced to close every day due to uncertainty over how much aid they will receive. 

Early last year, a direct aid package worth €7 billion was introduced to help SMEs and self-employed people adversely affected by the health crisis. Additionally, a government support scheme was rolled out to save an estimated 900,000 jobs that were at risk. 

Will the economic problems worsen? 

In 2020, the Spanish government predicted that the economic problems would continue for at least a year. Tourism accounts for 12.4% of GDP, and the restrictions on travel, as well as leisure and socializing, have meant further economic difficulties. 

In the Commission’s autumn forecast, it was predicted that the country’s economy could shrink by another 5.4% this year, before bouncing back in 2022 with 4.8% growth. 

Commercial debt for all of Spain’s administrations has been increasing since 2016. In 2020, this had increased substantially, with debts growing by €2 billion from the previous year. This means that the total debt is now 7.4% of GDP, compared with 6.5% in 2019. 

Additionally, the Commission estimated that Spain’s budget deficit would reach -10.1% this year. After the pandemic, debt could increase to around 115.6%.

However, the report noted that “it must be taken into account that (the Spanish) GDP fell dramatically last year, so the statistical effect is greater”. 

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