The lack of remuneration of deposits keeps the ‘appetite’ for Letters rising
The lack of remuneration of deposits by banks in Spain maintains at record levels the appetite of citizens by Treasury Bills during the first four months of the year. Spanish households rose by almost €11.4 billion (11,380 million) its investment in Treasury bills during the first four months of the year, reaching a volume of 13,206 million euros at the end of April.
According to the data that the Bank of Spain has updated this Friday and that Efe collects, in the month of December 2022 Spanish families accumulated 1,826 million euros in Treasure letters, a volume that has been rising strongly month by month since in January it reached 3,695 million and in February, 7,613 million. At the end of March, the possession of Treasury bills reached 10,847 million, and in April, those 13,206 million euros. A year earlier, in April 2022, the possession of bills in the hands of Spanish households was only 14 million euros.
The individuals have been increasing their investment in public debt as a consequence of the rises in interest rates that the European Central Bank (ECB) has undertaken, which has caused this type of product to offer an attractive return. In the last auctions held this June by the Spanish Public Treasury, the three-month bills offered a marginal interest of 3.263%; and those of nine months, 3,490%.
Similarly, the yield offered on six-month bills was 3.392%; and those of twelve months, of 3.468%, in both cases, in maximums since July 2012. On the other hand, with regard to bonds and obligations of the State, the investment by individuals grows, but to a lesser extent, since their expiration terms are longer. At the end of April, Spanish households had 1,731 million euros in this type of debt, compared to 1,407 million in December 2022, or the 883 of April of last year.
Current account balance
The current account balance, which measures income and payments abroad for the exchange of merchandise, services, income and transfers, recorded a surplus of 10.3 billion euros in the first quarter of the year, compared to a deficit of 4 billion in the same period of 2022, according to data published this Wednesday by the Bank of Spain and collected by Europa Press. The favorable evolution of the current account balance in the first three months of the year is mainly explained by the improvement of the balance of goods and services, including income derived from tourism.
Specifically, the balance of goods and services recorded a surplus of 13.6 billion, compared to the deficit of 2.2 billion a year earlier. Within this, the tourism surplus rose from 7.4 billion in the first quarter of 2022 up to 10,500 million reached in the first three months of this year. On the contrary, the balance of primary income (work income, investment income, production and import taxes and subsidies) and secondary income (personal transfers, current taxes, contributions and social benefits, etc.), registered a deficit of 3,200 million euros, above the imbalance of 1,800 million registered between January and March of the previous year.
The balance of the capital account, for its part, raised its surplus in the first three months of the year to 2,800 million, above the 1,100 million euros of the previous year. Thus, the aggregate balance of the current and capital accounts, which determines the financing capacity or need of the Spanish economy, reached a surplus of 13.1 billion euros between January and March, compared to a deficit of 2.8 billion in the same period of 2022.
In accumulated terms of four quarters, financing capacity reached 35.1 billion euros, 2.6% of GDP, higher than the 19.1 billion accumulated up to the first quarter of 2022 (1.5% of GDP). On the other hand, in the first quarter of 2023 Spain’s net international investment position increased its debit balance up to 826.100 million euros, 60.7% of GDP, compared to 804,600 million in the previous quarter (60.6% of GDP).
The gross external debt stands at 2.34 trillion
Thus, the gross external debt of Spain stood at 2.348 trillion euros in the first quarter of 2023 (172.6% of GDP), compared to the 2.327 trillion registered in the previous quarter (175.3% of GDP) and the 2,351 trillion in the first quarter of 2022 (189.9% of GDP). Therefore, although it increased in gross terms, the ratio in terms of GDP continued to decrease, following the evolution of 2021 and 2022, although it is still higher than the level of 2019 (169.8% of GDP).
Excluding the Bank of Spain and the debt registered between companies with a direct investment relationship, external debt increased in the monetary financial institutions (passing its debit balance from 545,000 million euros to 610,000 million) and in public administrations (from 593,000 million to 610,000 million), while the other resident sectors reduced their debt (from 293,000 million to 288 million euros).