Public debt: the financial balm of the Franco regime (1939-1975)


  • Francisco Comín



public debt, default, restructuring, inflation tax, financial repression, fiscal policy


This article provides an analysis of the objectives sought with earmarked public debt issuances during the Franco regime, the structure of outstanding public debt and debt sustainability along the dictatorship. As it was cheaper, Franco issued two much floating debt which afterwards was consolidated. Financial repression allowed the Treasury to pay low nominal interest, which was negative because of the strong inflation during the early Francoism and the twilight of the regime. The paper concludes that Franco regime issued much of its debt to finance investments outside the government budget, whose deficits were much lower than the huge volume of issued public debt. The poverty of the Treasury forced Franco governments to pay its policy of nationalization and industrialization with public debt, both in the autarky and during the development plans period. The lack of resources prevented Franco’s Treasury repay their debts; eventually public debt was wiped out by inflation tax and financial repression. This, along economic growth, made sovereign debt sustainable under the Franco regime.


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