Q3 net external debt at 72.2% GDP, lowest since June 2008

  • Lusa
  • 18 November 2022

"This is the lowest ratio observed since June 2008," stresses the Bank of Portugal.

Portugal’s net external debt fell at the end of September to 72.2% of gross domestic product (GDP), the lowest ratio since June 2008, totalling €167.7 billion, the Bank of Portugal (BdP) said on Friday.

Corresponding to the country’s net foreign liabilities, excluding equity instruments, gold bullion and financial derivatives, net foreign debt “fell from 79.8% of GDP at the end of 2021 (€171.1 billion) to 72.2% (€167.7 billion) at the end of September 2022,” the BdP said.

“This is the lowest ratio observed since June 2008,” it stresses.

According to central bank data, Portugal’s international investment position (IIP) – that is, the balance between financial assets abroad held by residents and liabilities issued by residents and held by the rest of the world – rose from -94.7% of GDP ( -€203.1 billion) at the end of 2021 to -86.5% of GDP ( -€201.1 billion) at the end of September 2022.

The BdP says that the increase in assets held by residents and the decrease in liabilities issued by residents to the rest of the world and also the growth of the national economy contributed to this evolution of the IIP, both in nominal terms and as a percentage of GDP.

In nominal terms, the change in the IIP was mainly due to positive exchange rate variations of foreign assets held by residents, specifically those denominated in US dollars and Angolan kwanzas, to a value of €7.8 billion, with this impact being “more expressive” in portfolio investment and direct investment.

The nominal change in the IIP also reflected the devaluation of financial assets by €17.1 billion, “especially debt and equity securities issued by the rest of the world and held by residents” and the devaluation of liabilities by €14.1 billion, “especially Portuguese public debt securities held by non-residents”.

It also resulted from the negative contribution of financial transactions, of -€1.5 billion.

According to the central bank, of the 8.1% reduction in the negative ratio of the IIP to GDP, 0.9% resulted from the nominal variation of the IIP and 7.3% from GDP growth.

The BdP will update the IIP statistics on 7 February 2023.