Public debt increases to €274.8 million in May
According to the Bank of Portugal (BoP) the country's public debt rose by €2.1 billion in May to €274.8 billion.
Public debt, in the Maastricht perspective, rose by €2.1 billion in May to €274.8 billion, according to data released on Thursday by the Bank of Portugal (BoP).
“This increase was driven by a rise in loans, namely through the second tranche of the loans disbursed by the European Commission (€2.4 billion) under the European SURE instrument,” the central bank explains in a statement. This transfer was made at the end of May as a low-interest loan to protect jobs and help to pay for other costs related to the pandemic.
As for the public debt ratio, it rose by 3.5 percentage points (p.p.) in the first quarter compared to the fourth quarter of 2020 (133.6% of GDP). This results from two effects: on the one hand, GDP contracted by 3.3% in the first quarter compared to the fourth quarter; on the other hand, the monthly amount of public debt grew by €4.8 billion in the first quarter.
Despite this increase at the beginning of 2021, the ratio is expected to decrease in the coming quarters given the strong recovery of the economy, which should lead to double-digit GDP growths in the second quarter. The government’s forecast is to reach the end of the year with a public debt ratio of 128% of GDP, 5.6 percentage points less than that of 2020. This forecast is based on an annual growth in the economy of 4% and a deficit of 4.5% of GDP in 2021, but these estimates may change when the State Budget for 2022 (OE 2022) is presented.
On the monthly data, central bank figures also reveal that general government deposit assets – the so-called “financial cushion” – increased by €1.3 billion to €20.6 billion. Thus, the public debt net of deposits increased by €800 million compared to the previous month, totalling €254.2 billion.
