New record set by public debt: 133.1% GDP

  • ECO News
  • 22 November 2016

Public administrations managed to get less indebted this year than on the homologous period in 2015, but that is not enough. Portuguese debt continues to soar.

Portuguese public debt has set a new record: in September, it increased to 133.1% GDP, its highest percentage since the beginning of the series compiled by the Bank of Portugal (since 2007). The indebtedness value seen between January and September 2016 was, in fact, lower than the value seen in the homologous period last year, but that did not suffice to descend the ratio.

The data from the Bank of Portugal, revealed this Monday, show that, in September, public administrations have accumulated 244.4 billion euros in debt according to Maastricht, the criteria Brussels finds most relevant. This number surpasses both the amount registered in the previous month and in the same month of 2015.

As a GDP percentage, a ratio ascertained every three months, the value is also larger than both the amount documented in June 2016 (which was 131.7%) and the numbers from September 2015 (when it was 130.4% GDP). The government’s goal for this year, embedded in the 2017 State Budget draft, is of 129.7% GDP. The goal set by the Stability and Growth Pact, which will be relevant if Portugal is able to indeed leave the Excessive Deficit Procedure in 2016, is of 60% GDP.

When analyzing the net deposit numbers from the central administration, the value is of 223.1 billion euros. This number is inferior to the one registered in August (which was 223.6 billion euros), but it was higher than the 213 billion euros registered in September 2015.

Source: Bank of Portugal

Financing declines in 2016

In spite of this record, the Bank of Portugal clarifies that between January and September the financing from public administrations was of 3.9 billion euros, “lower than the 4.2 billion euros documented in the homologous period of 2015”. This means public administrations have decreased their level of financing, but it was not enough to decrease neither the overall amount of the accumulated debt nor the ratio of debt to GDP.

The central bank brings forward that, when compared to 2015, this financing increased for residents but, on the contrary, the external financing decreased. This movement translated a “reduction of debt instruments (3.3 billion euros) and the anticipated reimbursement of the IMF loans in February 2016 (two billion euros less)”.