The functioning of countries and states requires public revenues and expenditures. That is why the public deficit and the debt problem have become the central axis of the economic concern that the Spanish State and the French State, which receive the Basques of the Basque Country, are experiencing, as well as in the rest of Europe and the world, where the same happens. If income outflows are significantly higher than income, debt must be addressed in order to continue to function, if health, education, public security, pension systems want to continue to function. In order to be indebted, it is necessary to go to banks, especially international banks, and pay interest to them. If you don’t fulfill the commitments you made – and the banks don’t forgive you – they strangle you and are able to collapse your economy and the functioning of society. And the banks – especially the international ones – demand guarantees to ensure that they receive what is owed to them and their expensive interests. This has led, as we have seen these days, to an attack on the rights of workers, pensioners and public employees. For this reason, the International Monetary Fund (IMF), the World Bank and the European Central Bank (ECB), as loudspeakers of banks, demand and demand adaptation measures. In this way, we will try to explain some terms: public debt, public deficit, fiscal policy, financial markets, etc.

What is public debt?

Public debt is money that the State has requested to finance its expenses and investments. When we talk about the public debt of the State, we must include that of the Central Government, as well as that of the autonomous communities; in the case of the Southern Basque Country, the governments of Vitoria-Gasteiz and Navarre, the provincial or provincial councils, the municipalities, etc. There are more than one form of public debt. In the case of the Spanish State the letters of the Treasury, the Obligations and the Bonds of the Treasury. But these are not just the forms that public debt takes. They could have done it, but municipalities don’t issue public debt, they turn to financial institutions for funding, just like a company would. Sometimes the administrations, above all those of the municipality, are also indebted at the expense of the suppliers.

In the Spanish state, public debt, according to experts, will be 70% of GDP at the end of the year, much lower than in most of our neighboring states. However, this is not the most serious, but the general indebtedness of society. At the end of 2009, the combined debt of both public administrations (central government, autonomous communities and municipalities) and private companies (businesses, households and banking sectors) amounted to almost EUR 4 trillion, or 390% of GDP. Non-financial corporations owed 143 per cent of GDP; banks and savings banks owed 107 per cent of GDP; and households owed 89 per cent. If, as a result of this situation, risk measurement agencies reduce the quality of the Spanish State’s debt, the increase in the price of money will affect all these sectors, and not only the State, when they go to renegotiate their credits and/or borrow more money.

What is a public deficit?

The public deficit reflects the fact that, for a given period of time, a State ' s expenditure is higher than its income. When we talk about the public deficit, we must include all public administrations in it (autonomous communities, municipalities, social security). The public deficit is measured in millionaires’ euros (1 million = 1 billion) and also as a percentage of GDP. In 2008 the State had an income of 300 million euros; the deficit was about 40 million euros, which represents a deficit of 13%. In 2009, the deficit exceeded 11% of GDP, about 120 million. And the Spanish government forecasts a deficit of 9.8% of GDP for 2010. In addition, taking into account the adaptation measures that have been proposed, the GDP is expected to reach 3% by 2013, but the first 7.5% in 2011 and 5.3% in 2012 should be achieved.

Restrictions and fiscal policy

The governments of Spain and France, the governments of Vitoria-Gasteiz and Navarre, as well as the rest of Europe, have implemented adaptation plans to reduce their public deficit, forced by the financial markets: reduction of salaries of public employees, freezing of pensions, postponement of retirement, labor reform to reduce expulsions and other antisocial measures. Those who are not responsible for the crisis are suffering the most from the effects of the crisis, and those responsible for the crisis continue to reap the benefits and implement their antisocial policies. For example, if fiscal pressure such as that of Europe were to be applied in the Southern Basque Country, €5.3 billion would be raised annually – €4,000 in the Basque Country and €1,300 in Navarre. ELA’s recent analysis says so, adding that, in the case of the Spanish State, the collection would have been another 90 billion. In this way the public deficit of the Spanish State would be overcome, without the need to impose anti-social restrictions.