The Stability and Growth Pact – the EU’s fiscal rulebook requires EU member countries to have public deficit lower than 3% of their gross domestic product and a debt pile lower than 60% of GDP. However, complying with the requirements is harder, if not impossible to achieve due to the serious impact of the Covid-19 pandemic.

Bank of Spain data published on February 18 showed that Spain’s public debt ended 2020 at 1.31 trillion euros ($1.51 trillion), accounting for 117.1% of gross domestic product as the coronavirus pandemic and the measures imposed to curb it lifted borrowing and led to a deep economic contraction. This is the highest level for at least 20 years. Debt as a percentage of GDP increased by more than 20 percentage points in 2020 from the 95.5% recorded in December 2019 with debt’s total value rose 122 billion euros ($147.16 billion) in 2020 only, mainly as a result of increased government spending on direct aid to people and companies affected by the pandemic, according to the economy ministry.

Spain’s economy shrank by a record 11% in 2020 from 2019, one of the highest drop in Eurozone, mainly due to the global halt in tourism. Official data from Labour Ministry shows that in 2020, the unemployment rate rose by 22% to nearly 3.9 million people.

On September 18, S&P Global Ratings revised Spain's outlook to negative from stable given the possibility that a budget will not be passed and economic weakness could persist into 2021 and 2022. However, the country's unsolicited long- and short-term sovereign credit ratings is affirmed at A/A-1.

Separately, Moody's affirmed Spain's issuer rating and unsecured bond rating at Baa1 and maintained a stable outlook. The rating agency said the pandemic's economic impact and the resulting widening of budgetary deficits are expected to be temporary.

Source:

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/s-p-cuts-spain-s-outlook-to-negative-moody-s-affirms-rating-at-baa1-60406389

https://www.reuters.com/article/health-coronavirus-spain-debt-idUSL8N2KN2RH

https://www.vietnamplus.vn/no-cong-cua-tay-ban-nha-nam-2020-tang-len-hon-1300-ty-euro/695564.vnp