Portugal’s economic indebtedness in July stood at €740B

After the fall observed in June, the indebtedness of households, corporations and the government increased again in July. It rose from around 4.6 billion euros to 740 billion euros, close to its all-time high, according to data released by the Bank of Portugal this Monday.

The non-financial sector indebtedness is at around 600 million from its highest level ever reached in May 2020. The pandemic is to blame, which forced the government and other economic agents to spend more money due to the new coronavirus outbreak.

In terms of the wealth produced by the country, the non-financial sector indebtedness soared by 20 percentage points in the last quarter, from 340.8% of Gross Domestic Product (GDP) in March to 360.2% of GDP at the end of June.

The Bank of Portugal explains that the increase registered in July (compared to June) was essentially due to “3.9 billion raise in public sector indebtedness and by the 0.7 billion euros increase in private sector indebtedness.”

Detailed by sector, the institution led by Mário Centeno said that the rise in public sector indebtedness reflected the growth in debt vis-à-vis the rest of the world (2.7 billion euros), vis-à-vis the financial sector (1.7 billion euros) and vis-à-vis corporations (400 million euros). “The increase of financing granted by the external sector (2.7 billion euros), the financial sector (1.7 billion euros) and the corporations (0.4 billion euros), partly offset by the reduction of financing granted by the general government (1.1 billion euros),” The Central Bank adds.

The increase in corporations’ indebtedness by 500 million euros resulted from a rise in financing granted by the financial sector (800 million euros), “which was partly offset by a reduction in external indebtedness (300 million euros).”

The households’ financing from the financial sector increased by 200 million euros.