Public administration debts in 2013 were around 6.6% of the national GDP, and Spain nearly met its agreement with the EU to trim the debt/GDP ratio to 6.5%. Local governments had a 4% budget surplus, which helps the overall situation since the Social Security system and regional governments failed to hit their targets.
The Social Security system is in big trouble. With a 1% deficit, it is now dipping into its reserve fund in order to pay pensions. To hit 6.6%, Montoro had to defer 2013 spending to the 2014 budget. Because the 2014 debt/GDP ratio goal is a trim 5.8%, the Finance Ministry will have to intensify its public sector spending cuts.
