The increase in public debt was the main responsible for the worsening of the overall indebtedness of the Portuguese economy, which totaled 721 billion euros in January.
The economy’s indebtedness increased in the beginning of the year. The total amount of debt from the non-financial sector grew 3.2 billion euros in February, especially due to a larger indebtedness in the public sector, going against a downward trend seen in the end of last year.
According to data disclosed this Wednesday by the Bank of Portugal, the non-financial sector’s indebtedness — which includes the non-financial public sector, private companies and Portuguese families — totaled 721.3 billion euros in January of 2018. This represents a 3.2 billion increase in comparison to the previous month.
“Compared to December 2017, non-financial sector indebtedness rose by €3.2 billion, due to an increase of €3.0 billion in public sector indebtedness and €0.3 billion in private sector indebtedness”, the Bank of Portugal contextualizes.
Economy increased its indebtedness in January
The evolution registered in January goes against the four-month plunge trajectory of the Portuguese economy’s indebtedness.
Explaining the increase in the public sector indebtedness “was reflected in an increase in financing granted by the financial sector, general government and corporations, and was partly offset by a decrease in external financing”, according to the Bank of Portugal. We should recall that in January, the Government moved forward with a new early reimbursement of the IMF loan, of 800 million euros, but it was able to get a 4,000 million euros’ financing by means of a banking syndication.
Concerning the private sector, “there was a €0.5 billion increase in the indebtedness of private corporations, chiefly reflected in a rise in external indebtedness. As to households, the most striking feature was a reduction in financing obtained from the financial sector”, the Bank of Portugal explained.