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Spanish public debt hits record high in September

Source: El Pais - Fri 15th Nov 2013
Spanish public debt hits record high in September

Spain's public debt climbed sharply in September to a new record high of €954.863 Bln, casting doubt about the government's ability to meet its target for the end of the year.

According to figures released Friday by the Bank of Spain, the state's outstanding obligations climbed €10.181 Bln in the month from August to a level equivalent to 93.4% of GDP. The government's target for the full year is 94.2%, a figure that has already been revised upward. The central bank estimated GDP in the 12 months to September at €1.022 trillion.

"There are concerns about the pace of the increase," Finance Minister Cristóbal Montoro acknowledged at a news conference after the regular Friday Cabinet meeting. Montoro said the rise made bringing down the public deficit even more of a priority.

The Treasury took advantage of favorable market conditions in September to issue €17.247 Bln in public debt when maturities amounted to 'only' €7.479 Bln. It issued a further €20.120 Bln in October, although maturities for that month totaled €23.981 Bln, meaning that next month's figures from the Bank of Spain should show a fall in total outstanding public debt.

A further €20 Bln in public debt is due to mature before the end of this year. The Treasury can call on a cushion of €43.380 Bln to do so as well as funds from new debt issues. However, the debt management arm of the Economy Ministry will need to pump more funds into the kitty the government has created to pay money owed to suppliers of goods and service.

Public debt is expected to rise to about the same level of GDP next year, surpassing 100% of output the following year.