The Director General of the Treasury, Pablo de Ramón-Laca, has affirmed that the best way to ensure the long-term sustainability of the Spanish debt is to guarantee structural growth. The Spanish debt, he assured, is “sustainable” and the interest burden should be used as an indicator, which has decreased in recent years, so “the debt is more sustainable year-on-year” .
De Ramón-Laca made these statements in an interview with RTVE collected by Europa Press in which he also explained that the organization is not “too concerned” by the proposal made by a hundred European economists that the ECB forgive the debt of the Member States because there is “a lot of confidence” in Spain.
A few days ago, the president of the PSOE, Cristina Narbona, and the economic manager of Podemos, Nacho Ãlvarez, adhered to a manifesto by European economists in which they demand that the European Central Bank cancel what the partners of the Eurozone, including Spain, owe it. The ECB subsequently dismissed the petition as “illegal” and “meaningless”.
Thus, De Ramón-Laca wanted to point out that compared to what he considers an “imperfect” indicator to assess debt sustainability, such as the debt-to-GDP ratio (which is more common), he prefers to use the interest charge, by representing what that debt costs to the Spanish.
In this sense, he stressed that the best way to ensure the long-term sustainability of the Spanish debt is to guarantee long-term structural growth, something that “is being done” through the announced reform and investment program. completion process by the Government, which it has described as “very ambitious” to increase potential growth and reduce the debt-to-GDP ratio.
Likewise, he affirmed that Spain can continue issuing debt to grow and has considered that this is not the time to tackle fiscal consolidation now, although he is in favor of tackling a medium-term plan.
Although he has ruled out entering the debt forgiveness debate, which has already been rejected by the ECB itself, it has stressed that rating agencies and institutions such as the IMF, the OECD or the ECB itself maintain a credit rating ” very high “over Spain. In addition, he recalled that investors buy Spanish debt even at negative rates with growing demand. “They all know that the Spanish debt is sustainable, that gives the markets a lot of peace of mind and it can continue to be issued as long as it is used to grow,” he added.
Regarding long-term debt, he recalled that the 50-year Spanish bond was launched in 2016 and has been opened on several occasions to a volume of 15,000 million euros.
In any case, he explained that the ECB is not the only investor in debt, but that “there are many investors of all types and regions”, such as pension funds, insurance companies, other central banks, banks or speculators. “Investors, analysts, rating agencies, all trust that this debt is very sustainable. There is a lot of confidence in Spain and that goes much further than what monetary policy allows,” he emphasized.
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