Madrid: Spain’s public debt reached a record 75.9 percent of gross domestic product at the end of June, official data showed Friday, fueling doubts over the country’s ability to manage its finances.
The country’s public debt stood at 75.9 percent of gross domestic product at the end of June, according to Bank of Spain data, close to the government’s target for the end of the year of 79.8 percent.
While Spain’s public debt is below the eurozone average of 88.2 percent, it has risen sharply after the collapse of a property bubble caused tax revenues to plunge and social spending on items like jobless benefits to soar.
The struggling country’s public debt has ballooned from a pre-economic crisis low of 36.3 percent in 2007 to 69.2 percent at the end of last year.
Spain’s 17 powerful regions, which account for half of all government spending, had a debt burden equal to 14.2 percent of output at the end of June, up from 12.8 percent from the same time last year, the central bank said.
Catalonia is the country’s most indebted region, with debt at 22 percent of its regional GDP.
Prime Minister Mariano Rajoy’s right-leaning government has already accepted a eurozone rescue loan of up to 100 billion euros to save banks still reeling from a 2008 property market crash.
But investors believe that Spain would soon seek a full-blown bailout, pressured by high borrowing costs and looming debt repayments including about 30 billion euros ($38 billion) in October.
Nevertheless, market interest rates have fallen since the ECB announced a plan to buy bonds of ailing states, raising a glimmer of hope in Madrid that it might be able to finance itself without foreign assistance.
The government has raised tax and made steep spending cuts to put its finances in order, sparking noisy street protests.
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