ECB cut the purchases of Portuguese debt in half in 2017

  • ECO News
  • 3 January 2018

The European Central Bank purchased only 6.4 billion euros in Portuguese bonds last year, half of what it acquires in 2016. And this took place before Draghi reduced the stimuli in 2018.

The Portuguese public debt purchases from ECB (European Central Bank) sank by half in 2017. ECB acquired 6.4 billion euros of bonds from the Portuguese Treasury throughout last year, according to what was revealed this Wednesday by the institution headed by Mario Draghi. In 2016, the central bank had purchased double the amount in Portuguese securities: 13.4 billion euros.

In the beginning of this year, ECB reduced in half its acquisition rhythm of bonds from Euro Area governments, decreasing the monthly purchases from 60 billion euros in 2017 to 30 thousand between January and September of this year, when this stimuli programme will come to an end.

Even so, regarding Portugal, that decrease in purchases has been felt all throughout last year, in a scenario of less liquidity in the Portuguese market, greatly influenced by ECB. The rules of the programme establish that the monetary authority could acquire around 1,200 million euros per month of Portuguese bonds. Nonetheless, the amount of acquisitions in Portugal stood well below that goal throughout 2017: the monthly average stood at 537.75 million euros.

Although analysts consider Portugal was one of the countries that benefited the most with this monetary stimuli programme and that the end of the purchase plan will have a negative impact on Portuguese debt interests, Cristina Casalinho, head of IGCP, had previously told ECO that the country was somewhat protected from the end of the quantitative easing precisely because ECB was already purchasing less Portuguese debt.

“When ECB decided to increase the programme from 60 billion to 80 billion euros, it was never able to purchase the maximum amount of Portuguese debt it would be expected. It always made smaller purchases than the maximum limit, and that decrease became increasingly sharper. So Portugal is already going through a process of cutbacks from the programme, which result from the way it is implemented”, Cristina Casalinho stated in August, in an interview to ECO.

According to data from ECB, the central bank acquired over 516 million euros in Portuguese debt securities in December, holding a total of 31 billion euros in Treasury bonds from Portugal.