Spain Public Debt Falls

Spanish debt fell for the first time since October in April, sliding €9.75 billion ($11.29 billion) to €1.15 trillion, the Bank of Spain said on Monday.

Debt as a ratio of gross domestic product was 97.87% according to Reuters calculations using the most recent National Statistics Institute growth data for the year period to end of March 2018.

That compared to debt-to-GDP of 98.8% in the first quarter, according to Bank of Spain data published on June 15.

Spanish household debt continued to reduce in 2017, reaching 61% of GDP (down 3%), according to the Bank of Spain. It has fallen 24% since its maximum level reached in 2010. Company debt at the end of the year amounted to 78% of GDP, with a fall of 5% over 2016. Company debt has fallen 39% since its maximums.

Household balance sheets strengthened again last year through the continued fall in debt as well as the increase in financial capital, driven by the investment in assets and their increase in value. Last year households invested in investment funds followed by the purchase of pension and insurance plans as well as bank deposits, The Corner reported.

While it is true that the rate of gross household saving reached 6% of gross disposable income at the end of the year, gross financial wealth increased by 2.1%. Gross household financial capital remained at levels of 300% of gross disposable income.

The principal component of gross household wealth is deposits, making up about a third of the total. Given the fall in debt, net financial wealth continued growing last year, reaching 192% of gross disposable income, with an increase of 1.3% in the period.

Spanish companies slightly increased savings last year, reaching 17.6% of GDP, while their net financial investment rose to 7.1% of product. The bulk of their financial investment focuses on equities and sight deposits.

New financing received by companies was 4.9% of GDP, mainly through shares and other stakes. Gross companies wealth remained above 200% of GDP.

The favorable financing conditions being offered by banks, the intensity of growth and optimism about its future evolution are all powerful arguments to expect an end to the reduction in household debt.