Public debt continues its downwards trend, falling to 125,8% of GDP on Q2

  • ECO News
  • 22 August 2018

Public debt has stumbled during the second quarter of the year, with June registering a 125,8% of GDP amount. Government is expecting debt to stand at 122,2% of GDP by the end of the year.

During the second quarter of the year, public debt stumbled to 128,5% of GDP, after having hit, on the first quarter, 126,4% of GDP. The governemnt’s goal is to reach a public debt of 122,2% of GDP by the end of the year.

June’s public debt target gave quite a relief to Costa’s administration — a four billion euros worth relief, to be precise.

The reduction was due to the reimbursement of ten-year-old tax obligations, that were overdue that month, and worth around €6,6bn.

According to the Statistics published by the Portuguese Central Bank (BdP) this Wednesday, public debt hit 125,8% of GDP in June, which accounts to a very noted fall in comparison to March’s values.

Looking forward, the office led by Centeno has the expectation that public debt will continue its downward trend, until the end of this year. The stability pact presented by the government last April predicted it to hit 122,2% come December.

On one hand, the reduction might be explained by the decrease in indebtedness in gross terms, after the reimbursement of €6,6bn to investors. On the other hand, the growth rate of the economy during this quarter alçou enhanced the fall. The first estimates from the Portuguese Office for National Statistics (INE) showed that PIB had increased by 0,5% between April and June, in comparison to the previous quarter, while there was a year-on-year increase of 2,3% in GDP.

Public debt decreases

GDP/Debt ratio, Source: BdP, * Government’s estimation for December

Level of indebtedness of the Portuguese economy going down

It has lowered significantly in June, according to the BdP. It hit €721,1 billion, of which €318 billion were related to the public sector and €403,1 billion to the private sector.

 

[Updated at 13:04]