By Ovunc Kutlu
ANKARA (AA) – Spain's government debt is expected to decline gradually after the coronavirus pandemic, the global rating agency Fitch Ratings said Tuesday.
The government debt ratio is expected to decline to 116.6% of gross domestic product (GDP) by the end of 2023, from 120% in 2020, the agency said in a report.
The deficit is also estimated to narrow to 4.5% in 2023, from 11% in 2020.
"The Spanish economy entered the pandemic crisis in much better shape than at the onset of the global financial crisis," the report said.
"Next Generation EU funds could boost medium-term growth potential and accelerate the pace of public debt reduction," it added, referring to the EU economic recovery package.
Fitch said it forecasts Spanish economy to expand by 6.3% in 2021 and 6.4% in 2022, adding: "Robust growth rates will be accompanied by declining unemployment."
While Spain's credit rating is "A-" with a stable outlook, Fitch warned that failure to implement a credible economic and fiscal strategy could lead to a negative rating action.
However, a firm decline in government debt to GDP ratio in the medium term, or a sustained economic recovery, may have a positive impact on the country's rating, it added.