Spanish 2020 public debt soars on pandemic spending

MADRID: Spain's public debt jumped to 1.31 trillion euros ($1.59 trillion) at end-2020, equal to 117.1 percent of national output, central Bank of Spain data showed Wednesday, as the government boosted spending to tackle the economic fallout from the pandemic.

Socialist Prime Minister Pedro Sanchez's government had however expected the public debt to hit 118.8 percent of output in 2020, up very sharply from 95.5 percent the previous year.

The increase "is largely due to direct aid and measures implemented to respond to the health, economic and social effects of Covid-19," the economy ministry said in a statement.

The measures include a furlough scheme for people laid off from their jobs because of the pandemic which was recently extended until May, and financial aid for self-employed workers.

The government's budget for this year includes record spending on health and social care, and a hike in infrastructure investment, aimed at supporting an economic recovery following a steep recession due to the pandemic.

Spain's economy contracted sharply by 11 percent in 2020, one of the eurozone's worst results, with its key tourism sector battered by the health crisis.

The number of registered jobless in Spain jumped by nearly 23 percent last year to just under 3.9 million, according to labour ministry figures.

Massive government spending to battle the coronavirus pandemic have pushed up public debt in nations around the world but the International Monetary Fund (IMF) predicts the run-up may be a one off event if the global economy rebounds this year as expected.

Optimism that new vaccines will bring the pandemic under control and allow economic activity to resume, coupled with stimulus in major economies, has boosted the IMF's growth forecast this year to 5.5 percent, according to its latest World Economic Outlook.