Under the scenario of a more moderate fall in GDP, the public debt/GDP ratio would rise to around 115%, a similar figure to that projected by the Spanish Government, the European Commission, the IMF and the AIReF. Under the harshest Banco de España scenario, the debt ratio would in fact stand at over 120% of GDP (some 25 pp higher than at end-2019).4 Under the assumption of economic recovery projected for 2021, the public debt/GDP ratio would stabilise around its 2020 levels or fall slightly. This projected path is not specific to Spain: in its latest World Economic Outlook, the IMF estimated that the increases in the deficit and debt ratios, as a percentage of GDP, might rise in 2020 to a comparable scale across the advanced economies. Likewise, on the European Commission’s latest forecasts, public debt in the euro area as a whole will stand this year at 102.7%, and exceed the 100% threshold in another six countries, as well as Spain. 4  Comparisons between Institutions on the budget deficit and public debt increases forecast for this year are hampered by the timing of the preparation of the projections and, therefore, by the fiscal measures approved that have been taken into account, beyond the differences between institutions stemming from the different macroeconomic scenarios and from the estimated responses of public revenue and spending to the projected downturn in activity.
On one hand, certain aspects of the application of current accounting rules for calculating credit risk are clarified. On the other, the aforementioned authorities have ruled that banks may effectively use the capital buffers available to absorb unexpected losses. Specifically, the aim of the clarification of the accounting rules is to prevent potentially temporary delays by borrowers in repaying their loans from receiving the same treatment as though what were involved was a lasting impairment in the quality of the loans. The latter would lead to an immediate and abrupt adjustment of credit ratings and, therefore, to an increase in the provisions required which, ultimately, would lead to a downward adjustment in the credit extended by banks. In exchange, it is necessary to prevent the wrongful use of this flexibility from leading to inappropriate accounting practices that translate into a delay in recognising the actual impairment of the quality of certain credit exposures. 27  In the second of the two areas mentioned, the Banco de España has conveyed to all the institutions it directly supervises the various measures introduced by the different macroand microprudential and resolution authorities to alleviate capital and liquidity requirements. Moreover, the Banco de España has recommended that banks under its supervision should temporarily eliminate dividend payouts and apply prudent criteria in the variable remuneration of their staff, so that they may channel the funds they generate towards reinforcing their capital positions.