Public debt reaches 130% of GDP in Q3

Public debt, from the point of view of Maastricht, fell by 112 million euros in September to 267.114 million euros, slightly dropping from the peak reached in August at 267.114 million euros. However, the ratio to GDP rose from 126.1% in the second quarter to 130% of GDP in the third quarter, according to the report released on Monday by the Bank of Portugal.

The public debt burden increased 3.9 percentage points in the third quarter, after having climbed 6.6 percentage points in the second quarter due to the pandemic crisis. On one hand, the stock of public debt rose to new highs with the state’s need to make more spending. On the other hand, the fall of the economy dictated a worsening of this indicator.

In the third quarter, according to data from the Portuguese National Statistics Institute (INE), GDP shrank 5.8% compared to the same period last year, despite a recovery of 13.2% compared to the second quarter of 2020, the most affected by the pandemic.

With this increase to 130% of GDP, the public debt ratio returns, albeit temporarily, to a level that was in the third quarter of 2017, when the ratio reached 131.3%. Since then, until the pandemic, the share of public debt had fallen to 117.7% in the fourth quarter of 2019. In the first quarter, already because of the virus, the ratio rose to 119.5%.