Indebtedness of the economy rises again in August and reaches 724 billion euros

The Portuguese economy returned to debt in August, at around 400 million euros. The total debt of the public and private sector (companies and families) reached 724 billion euros at the end of that month, rising again after two months of deleveraging, according to data revealed this Monday by the Bank of Portugal.

“In August 2019, the indebtedness of the non-financial sector stood at 724 billion euros, of which 319.8 billion euros related to the public sector and 404.2 billion euros to the private sector,” said the central bank.

“As regards July 2019, the indebtedness of the non-financial sector increased by 400 million euros, due to the increase in public sector indebtedness, given that private sector indebtedness remained at the same level”, explains the institution.

In the note released today, Bank of Portugal said it revised this statistical series to reflect the revision of the national accounts base change that occurred in August. For example, in relation to the month of July, it had initially been indicated that the total debt amounted to 728.7 billion, but there was now an update of this amount to 723.6 billion euros. Among the changes made is the fact that the public debt is now counting the interest on the certificates.

According to the central bank, the increase in public sector indebtedness was mainly reflected in an increase in external indebtedness, which was partially offset by a decrease in indebtedness to the general government itself, to companies and to the financial sector.

As regards the private sector, private companies reduced their exposure to the financial sector (banks and other credit institutions) by 200 million euros, while households increased their indebtedness to the same sector by 200 million euros.