Spain, the second country in the world with the most external debt

Spain, the second country in the world with the most external debt

Washington, (Europa Press) .- The debt of Spain with the exterior reached in 2013 the 1.4 trillion dollars ( 1.1 trillion euros ), which makes it the second country in the world most indebted to the outside after United States, according to the International Monetary Fund (IMF) in the fourth chapter of the new edition of its report ‘Global Economic Perspectives’.

The negative balance of 1.4 trillion dollars (1.1 trillion euros) of net external assets of Spain is only surpassed by the 5.7 trillion dollars (4.5 trillion euros) of the United States and is quite above the third indebted country, Brazil with 750,000 million dollars.

However, if compared to the proportion that these assets represent of GDP in the case of Spain, the percentage reaches 103.1%, while in the United States equivalent to 34% and in Brazil to 33.4%.

According to the statistics of the Fund, Spain’s foreign debt is much higher than that of 2006, when it was 862,000 million dollars, which was equivalent to 69.7% of GDP.

By contrast, the largest creditors in the world in 2013 were Japan and China with a positive balance of net external assets of 3.06 and 1.69 trillion dollars (2.42 and 1.34 trillion euros), respectively.

Despite this indebtedness, the current account balance of Spain has decreased considerably in recent years, as it closed 2013 with a surplus in contrast to the deficit of 111,000 million dollars in 2006, the second largest in the world.

Less imbalances

On the other hand, the IMF considers that, despite the progress made in reducing current account imbalances, there is still room to reduce the “excessive” current account deficits and surpluses in several advanced and emerging economies.

The institution led by Christine Lagarde emphasizes that global imbalances were reduced by more than one third between 2006 and 2013, which has led to a decrease in the concentration of imbalances and the associated systemic risks.

This has coincided with a reduction in the largest deficits (the United States and the euro area economies subject to tensions) and surpluses (China and Japan). However, he cautions that surpluses in the core countries of Europe have remained important, and current account balances have deteriorated in some emerging markets.

The fund highlights that, to a large extent, the adjustment of the imbalances of flows has been driven by weak demand in deficit economies, which has been accompanied by an increase in unemployment in these countries.

Differences in growth due to a faster recovery of emerging markets and commodity exporters have also helped this adjustment. However, there has been much less recourse to the reorientation of expenditure.

The IMF expects that the reduction of imbalances will be lasting, because a large part of the losses in production are structural, even when in the medium term deficit economies reduce their production gaps. However, it warns that there is a risk that the imbalances will expand again once the economies recover completely.

Risks to the economy

In this context, the Fund notes that, although the current situation points to a decrease in external vulnerabilities in the coming years, some economies remain at risk.

In 2006, current account balances and balances in net external assets of a series of economies approached or exceeded thresholds associated with previous crises. Since then, many of these economies have become less vulnerable, and the most recent projections indicate that external vulnerabilities will continue to decrease in the coming years.

“However, although the systemic risks posed by global imbalances have diminished, there is still room to reduce excessive current account deficits and surpluses in several advanced and emerging economies,” he warns.

In this context, he argues that policy efforts in search of global rebalancing remain “a priority” and believes that a reduction in net external liabilities in debtor economies requires improvements in current account balances and further growth. solid.

“Stronger external demand and greater reorientation of spending would contribute to both roles, and it would be useful to take measures to achieve stronger and more balanced growth in the major economies, including those with surpluses that have room for maneuver to respond through “, adds the fund.