Brussels, Jan 25 (EFE) .- Brussels warned of the “risks” and “vulnerability” that creates the high Spanish public debt, around 100% of its GDP, a burden that believes accompany the country in the next decade unless they take “meaningful” steps.
In 2007, Spain had managed to reduce its public debt to 35.5% of GDP after eleven years of downward trend. But less than a decade later with the financial crisis, bursting of the housing bubble, European banking rescue of over 40,000 million euros and significant contraction of GDP, the figure equaled the weight of the Spanish economy itself.
The Commission considers that this upward trend could come to an end this year, scoring a 101.3% then experience a slight reduction the following year to 100.4%, as reflected in its triennial report on the sustainability of public finances of Member States, released today.
However, predictions are not optimistic Brussels as estimate that Spain will fail to lower its public debt of 100% until 2020 and that it will continue at 92% in ten years. Yes, as long as the economy maintains a “normal” conditions and fiscal efforts are maintained.
This “high level of public debt is a source of vulnerability for the Spanish economy,” says the institution, that warns of the “high risk” in the medium term this can mean, especially if something goes wrong, although in the short and long term sustainability is not afraid of the Spanish coffers.
The Commission is possible the pace of debt reduction improves, but at the cost of a “significantly higher” structural efforts which today are on the table.
In particular, estimates that, in order to reduce the debt to 75% of GDP in 2017, would take in the coming years to add an additional 2.5 percentage points to the structural primary surplus of 0.2% that the EC expected in 2017.
Brussels and partners Eurogroup disincentive aware of involving the general elections when governments retain approval unpopular reforms and adjustments, spent months calling on Madrid to maintain efforts and not undo the road traveled.
The EC is now pending the outcome of the general elections in Spain, which has not yet reached an agreement to form a government.
Brussels wants to see a “stable government”, as said EU spokesman today Margaritis Schinas, who avoided comment on whether or not there is concern about the political situation in the country.
In addition, the Commission expects the new government to send a new version of the general budget for this year set that currently in force to ensure that the public deficit this year is reduced below the ceiling of 3% demanded by European legislation, which now looks at risk.
Spain is also exposed to drift the global economy and its European partners, especially the rest of southern countries, on planning uncertainties.
On the one hand, doubts about the way remain that take the market turmoil emerging and the effects of higher interest rates in the United States throughout this year.
In addition, the problems of the Portuguese financial sector, latent Greek crisis and the worrying state of the Italian banking system may create stresses to which Spain is still exposed, even though its position is more stable than its other partners in the periphery beginning.
Given all these issues and the different scenarios that may arise, the Brussels conclusion is clear: Spain “has a high risk in the medium term from the perspective of the analysis of debt sustainability”
By María Tejero Martin
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