Novo Banco with “impact of 200 million in public accounts”

  • ECO News
  • 13 October 2020

The state budget for 2021 does not foresee any sum for Novo Banco, but it will have a weight on public accounts. João Leão points to 200 million euros.

Novo Banco was out of the State Budget for 2021. There is no State loan for the Resolution Fund (FdR), and the needs are covered by a commercial bank loan of 275 million euros. The institution led by António Ramalho will have an “impact of 200 million euros in public accounts,” says João Leão, Portugal’s finance minister.

“What we have in the budget of the FdR are loans from the financial sector worth 275 million euros and the FdR’s own revenues,” says the Minister of Finance. “There is no state intervention here, [the OE 2021] doesn’t have any loans to the DFR next year,” Leão added in the State Budget presentation.

“What is planned is that the banking system will lend to the FdR, and it will only be through loan and its own revenues that it is financed,” reiterated João Leão. However, Novo Banco will eventually be part of State Budget 2021, through the impact on public accounts in a year in which the government foresees a deficit of more than 4%.

The FdR is “an entity that is part of the financial system and that entity, for statistical reasons, because it is in the perimeter of the state, may have an impact of 200 million euros in public accounts,” said Leão. “It is something that is not yet realized. It is not yet certain that this operation will materialize. It’s the most it can achieve,” the minister said.