Courtesy of Mish.
On Monday, Spain reported that its debt-to-GDP ratio would hit 100% in 2014.
Spain’s public debt will soar to nearly 100 percent of output at the end of 2014, the government said Monday, despite massive spending cuts that have triggered angry street protests.
Spain’s ratio of debt to gross domestic product (GDP) will hit 99.8 percent at the end of next year after rising to 94.2 percent at the end of 2013, higher than previously forecast, according to details of the government’s 2014 budget presented in parliament.
The debt ratio has soared from 40.2 percent of GDP in 2008, when the end of a decade-long property boom triggered an economic slump that caused unemployment to jump and tax revenues to plunge.
Prime Minister Mariano Rajoy’s conservative government had forecast in its 2013 budget that the debt-to-GDP ratio would stand at 90.5 percent at the end of this year.
Pensions will rise by just 0.25 percent in 2014, the minimum allowed under a pension reform approved by the cabinet on Friday that will stop indexing payouts to inflation.
Where’s the Money Going?
Here’s an interesting chart of Spain’s budget allocation courtesy of La Vanguardia.
Via Mish-Modified Translation
Pensions, unemployment and interest payments on the public debt eat more than half of budget expenditure planned for 2014, as stated in the draft State Budget (PGE ) for next year. Specifically, these three items totaling €193.801 billion, representing 54.6% of total expenditure in the budget provided, totaling €354.622 billion, 2.7% more than in 2013.
Spending on pensions, unemployment benefit and interest of the debt, the largest items along with transfers to general government, will increase next year by 3.5% compared to 2013. The biggest spending budget is pensions, which are carried €127.483 billion, representing growth of 4.9% over the previous year and 35.9% of total expenditure. The government plans to raise pensions by 0.25% in 2014.
Meanwhile, the unemployment starting with an allocation of €29.727 billion euros, up 10.1% and 8.4% of the total. As for public debt, interest will amount to €36.590 million euros, 10.3% of total expenditure, down 5.2% from 2013. Interest is equivalent to 3.5% of GDP.
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