In 2013 the national debt managed to shrink to 94.3% of the GDP, but by 2015 or 2016 "it will settle around 100%, which is an unsustainable level." Íñigo Fernández de Mesa, the Secretary of the Treasury, uttered these words, a euphemism for saying that it will be hard to trim our overall debt load in 2014.
These predictions put us far from a stable debt to GDP ratio, which should be around 60%. We might be able to reach this goal by 2020, but doing so will be difficult even though the risk premium and interest rates will both drop. The government cannot afford to bask in pride, nor can it relax efforts to finish reforms. Especially now that we are going above the debt ceiling. We are forced to keep asking for loans to finance our bad decision-making. For example, this year we are taking out 65 billion euros in debt.
Of this amount, the Regional Liquidity Fund (known by the acronym FLA in Spanish) will end up with 23 billion euros. This is the same amount they got in 2013, because the regions, even though they met their deficit goals for 2013, will keep spending more than they earn. The same is happening to the national government. In all likelihood, we are going to get out of the budget hole, but we won't be out very far if we fail to solve the root of the problem: balancing the budget. This will not be possible without finalizing national administration reforms and tax reforms that generate more revenues without increasing taxes. If the executive tosses reforms, then we will have missed a critical opportunity to get out of this jam and we will continue to trail behind the rest of Europe.
