Spain’s 2012 Public Debt Advances 20%, Below EU Forecast

Spain’s public sector debt surged 20 percent last year as the government sought European aid for its banks and backstopped the nation’s municipalities as well as its tax-funded pensions and jobless-benefit systems.

Borrowings rose to 884.4 billion euros ($1.15 trillion) at the end of December from 736.5 billion euros a year earlier, according to the Madrid-based central bank’s estimate. That represents 84.1 percent of gross domestic product, up from 69.3 percent a year earlier and 77.3 percent in the third quarter. It is less than the European Commission’s forecast of 88.4 percent.

Spain’s debt load will beat the euro-area average for the first time in the currency’s history this year and top 100 percent of output in 2014, the commission says. Rated one to two steps above junk by three rating companies amid a sixth year of slump, the region’s fourth-largest economy has so far avoided a full bailout, helped by European Central Bank support.

The central government accounted for most of the debt, while the 17 semi-autonomous regions generated 185 billion euros, up 11 percent from the previous quarter. Spain’s more than 8,000 town halls’ debt was 42 billion euros and the state’s Social Security welfare system 17.2 billion euros, data released on the Bank of Spain’s website showed.

The yield on Spain’s 10-year benchmark bonds was unchanged at 4.87 percent at 10:45 a.m. in Madrid, compared with a euro- era high of 7.75 percent in July, before the ECB stepped in to backstop the euro. The spread with similar German maturities widened to 339 basis points.

To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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