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Calvino argues that the rising rates can be managed and that the debt can be managed.

The Government has been woken up by recent tensions in the credit markets.

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Calvino argues that the rising rates can be managed and that the debt can be managed.

The Government has been woken up by recent tensions in the credit markets. These were resolved by the promise of European Central Bank (ECB), to create an 'antifragmentation mechanism' that will contain risk premiums. Already, the rising cost of financing State projects has been exacerbated by the new cycle of interest rate increases.

The Executive has maintained that the situation can be managed for weeks, while it seeks to retain the trust of Spanish investors who have bought Spanish debt. Nadia Calvino (economic vice president) defended Tuesday the indebtedness strategy of the Public Treasury. For years, it has been able take advantage of the favorable environment of negative rates to confront normalization of monetary policies in a positive situation.

Calvino, speaking at the press conference following the council of ministers, recalled that the Treasury has increased the average life of its debt by over 8 years. This reduces the possibility of it being refinanced. He said that 15% of the debt can be refinanced each year. This reduces the impact on rising interest rates. The body that is dependent on the Ministry of Economy already has executed over 60% of the planned issues for this year with a budgeted Interest Charge of 30,000,000,000 euros. This allows it to face the expected increase in interest rates at the next ECB meeting in June, when the first rate rise of 25 basis points in 11 years will be expected.

The average cost of debt today is 1.59%. This is lower than it was at the end 2021 (1.64%), with a maximum of 3.6% which was reached in 2013. The cost of interest on debt versus income dropped to 5%. This is similar to the level at the beginning of 2009 with a maximum 9.2%.

Calvino stated before the media that "normalization to contain inflation is translating in higher interest rates on government debt, but they are still low historically,"

He also indicated that international investors still have "great confidence" in Spain, which indicates that although risk premiums are increasing, they are relatively low compared to past crises.

Calvino stated that, despite all the uncertainty and disruptions in supply chain, "the truth is that Spain's economy continues to grow strong, and we are using it to continue our fiscal consolidation."

The Government has included in its Stability Program the prediction that the debt will be lower than 110% of GDP by 2025 and that the deficit will be lower than the 3% limit set by the European stability agreement, whose fiscal rules are currently suspended.

Calvino stated that the responsible management of the past years has allowed us to effectively respond to these challenges without losing sight the medium-term direction that allows us continue to progress," Calvino stated during his appearance.

The Minister of Economy reiterated the message he had earlier sent this week. He warned that Spain is currently in "high uncertainty", and that "the news about oil is not positive". He also stressed that many downgrades have already been made to growth forecasts for the euro area.

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