Data released on Monday by the Bank of Portugal do not confirm the expectation of Finance Minister Mário Centeno of a fall in nominal debt last year.
The Portuguese public indebtedness totalled 249,740 million euros in 2019. The amount represents an increase of 597 million compared to the 249,143.07 million euros registered at the end of the previous year, which means that the nominal debt did not fall as expected by the Finance Minister, Mário Centeno.
According to data released this Monday by the Bank of Portugal, in December, the Portuguese public indebtedness from the Maastricht point of view – the debt that Brussels expects to use in the Excessive Deficit Procedure – was slightly below 250 billion euros.
This represents a fall of 1,386 million euros in December (a month in which there are traditionally fewer new debt issues) compared to November and is considerably below the historical maximum recorded in May (256,738 million euros). Nevertheless, in the annual comparison, there was an increase in the national public indebtedness.
Evolution of public indebtedness in nominal terms
Centeno had opened the door to a reduction in nominal debt – and not just as a percentage of Gross Domestic Product (GDP) – in the debate on the State Budget for 2020. It would have been the first time since 1995, but figures released this Monday by the Bank of Portugal show that the minister failed to reach the target.
“The reduction in public indebtedness is good news. We’re probably about to have some additional good news, which is that the nominal debt may have already been reduced in 2019,” the finance minister said in Parliament, in the general discussion and vote on the state budget for 2020.
The ratio of public debt to GDP ratio – a more relevant indicator because it measures the country’s capacity to pay off the debt in relation to the wealth generated – has already been falling over the last three years on the back of economic growth.
The public indebtedness ratio peaked in 2016 when it reached 131.5% of wealth produced. Since then it has been falling, and the proposed State Budget for 2020 foresees that the level of indebtedness has fallen to 118.9% of GDP in 2019 and will fall again to 116.2% of GDP this year.