(AP) MADRID - The level of Spain's debt rose in the first three months of the year, according to figures from the country's central bank released Friday.
The Bank of Spain said that as of the end of the first quarter, Spain's total debt - central, regional and local governments - now stands at 72 percent of gross domestic product. That compares to 65 percent as of the same quarter last year and 68.5 percent at the end of 2011. The government has already said the rate will hit 80 percent by year's end, and that was before it agreed to accept a bailout of up to 100 billion euro ($125 billion) to prop up its fragile banking system.
Spain's figure compares favorably with other members of the 17-country euro union - Germany's debt ratio stood at 81.2 percent at the end of 2011, while Greece's was 165 percent and Italy had 120 percent. However, it is the fact that the country's economy is struggling and that it is about to take on new debt to prop up its banking sector that is raising fears across Europe.
Spain agreed at the weekend to tap a bailout loan from the eurozone to use on in its banking sector. As this agreement involves first lending the money to Spain, there are concerns that taxpayers are ultimately on the hook for the banks' bad decisions. Also, investors are worried that the deal raises Spain's debt and deficit levels.
News of the country's rising debt levels came as the country's closely watched borrowing rate dropped slightly Friday but remained dangerously close to the level that forced Greece, Ireland and Portugal to ask for bailouts of their public finances, and the central bank reported the country's overall debt up sharply.
The interest rate - or yield - on the country's benchmark 10-year bonds slipped Friday morning to 6.77 percent - still close to the 7 percent level considered by analysts to be unsustainable in the long term. Stocks in Madrid rose 1.2 percent.
Investors across Europe took heart from speculation that central banks around the world are gearing up for action to boost economies threatened by the eurozone's financial crisis.
Meanwhile Prime Minister Mariano Rajoy met with EU Competition Commissioner Joaquin Almunia, a fellow Spaniard. Rajoy's conservative Popular Party has accused him of being disloyal to the country by discussing publicly details of the bailout, such as the interest rate and the possibility of Spain having to close down some banks altogether.