Who holds Portugal’s public debt?
Households are now one of the state’s main creditors, holding almost 18% of the total public debt – three times more than a decade ago. But they are not yet the largest.
The government currently has a debt of over €275 billion, a figure equivalent to almost 90% of the national economy’s annual output. It is a mountain of debt that the government has accumulated over decades.
On the other side of the equation are different types of creditors whose significance has changed radically over the last 25 years, according to data published on Thursday by the Bank of Portugal, revealing not only the scars of various crises, but also the growing role of households in financing the state itself.
During the first decade of this century, public debt was, for the most part, a foreign affair. In 2008, non-resident investors held 72.4% of Portugal’s total debt; in other words, almost three out of every four euros lent to the state came from outside the country. Portugal’s entry into the Eurozone in 1999 had driven down interest rates and made the national debt an attractive destination for international capital, particularly from European banks and investment funds.
This share fell dramatically over the following two decades, although non-residents remained the Portuguese State’s largest individual creditors, holding 47.2% of the public debt stock at the end of 2025 — a lead which, in itself, shows just how dominant their position once was. And it was precisely this “excessive” dependence on foreign investors that proved dangerous for the Republic.
When the global financial crisis of 2007–2008 shook the markets and doubts about European public finances soared, foreign investors unwound their positions at such a pace that Portugal was left without access to market financing, forcing it to request a bailout from the troika in 2011.
The exit of foreign investors made way for a new player that nobody had expected: the central bank. In 2009, the Bank of Portugal and the European Central Bank (ECB) held just 0.36% of national public debt, a residual, almost negligible share. But the launch of the ECB’s asset purchase programmes from 2015 onwards, known as quantitative easing, changed everything.
The institution, led at the time by Mario Draghi and later by Christine Lagarde, began buying up government bonds from member states on a large scale to stimulate the Eurozone economy and curb deflation. The result was a historic shift: the central bank came to hold 26.3% of the stock of general government debt in 2021 — today it holds 21.8% of all Portuguese public debt, more than double that held by all households combined.
But the real surprise in this story is the role of households. In 2012, the worst year of Portugal’s deepest recession in 40 years, households held just 5.4% of public debt – a modest share, held mainly through Savings Certificates and Treasury Certificates.
However, the combination of historically low market interest rates, which made bank deposits unattractive, and the government’s decision to offer competitive returns on its savings products, changed this landscape.
With Savings Certificates offering rates well above those on deposits during the years when the ECB raised interest rates, between 2022 and 2024, the Portuguese snapped up the product en masse and households came to hold 17.8% of public debt by the end of 2025, more than tripling their share in around a decade.
Domestic banks took the opposite path. In 2010, resident financial institutions held 21.5% of the stock of public debt, a significant share that reflected Portuguese banks’ tendency to invest in sovereign debt, considered safe.
However, the European sovereign debt crisis and the capital requirements imposed by regulators gradually pushed banks out of this market, and the role of the ECB’s purchases absorbed much of the demand. By the end of 2025, resident banks held less than half the share they had in 2010: just 10.3% of national public debt, less than households themselves.
The current picture of Portugal’s public debt reveals a creditor base that is vastly different from what it was 25 years ago. Foreign creditors, who once accounted for almost three-quarters of the total, stood at 27.8% by the end of 2025 – although they remain the largest individual group, they are far from the dominant position they once held.
The central bank, households and banks now form a domestic triangle holding more than half of all Portuguese government debt, in a much more diversified structure and, in the view of many economists, less vulnerable to sudden outflows of foreign capital such as those that precipitated the 2011 crisis, given that over 72% of the Portuguese Republic’s debt stock is held by nationals and the central bank.
Portuguese public debt is falling – as a percentage of GDP, it peaked at 132% in 2014, following years of austerity, and ended 2025 below 89.7% – but it remains, down to the last cent, a mirror of the country’s economic history, with each crisis leaving its mark on the holders: the foreigners who fled with the troika, the central bank that arrived with the ECB’s bazooka, the households that discovered Savings Certificates as an alternative to bank savings.
