Finance ministry says 7.7 p.p drop in debt ‘largest ever’
The finance ministry said this Tuesday that the 7.7 percentage point decrease in public debt last year, to 127.5% of GDP, was "the largest reduction ever" recorded.
Portugal’s finance ministry said on Tuesday that the 7.7 percentage point decrease in public debt in 2021, to 127.5% of GDP, was “the largest reduction ever” and “fundamental to the country’s international credibility”.
“The Bank of Portugal confirmed today that Portugal resumed in 2021 the trajectory of public debt reduction, interrupted by the pandemic. It was the largest reduction in public debt (as a percentage of GDP [Gross Domestic Product]) ever and the first time in a democracy that public debt was reduced in nominal value, having fallen by €900 million compared to 2020,” the ministry headed by João Leão said in a statement.
Stressing that “this major reduction in public debt was possible due to the strong recovery of the Portuguese economy, the improvement of public accounts and the optimisation of the state’s overall treasury,” the government said that “this is excellent news for Portugal”: “The resumption of the trajectory of reduction of public debt is fundamental to the international credibility of the republic and confidence in the Portuguese economy,” it said.
According to the finance ministry, “in the current context of normalisation of monetary policy in the EU,” this result “allows for greater security and stability and better financing conditions for the State, businesses and families.
He emphasised that something is “a fundamental determining factor for the recovery of the Portuguese economy and investment”.
In the Maastricht view, which counts for Brussels, public debt fell by 7.7 percentage points in 2021, from 135.2% to 127.5% of GDP, the Bank of Portugal (BoP) revealed today.
According to information released by the central bank, at the end of 2021, public debt totalled €269.6 billion, €900 million less than at the end of 2020.
“This reduction reflected amortisations of debt securities, amounting to €4.6 billion, which were partially offset by the increase in liabilities in deposits (€1.4 billion), namely third-party deposits with the public administrations and savings and Treasury certificates, and in loans (€2.4 billion),” it stated.
According to the BoP, the variation in loans “was mainly explained by the amounts received from the European Commission under the European SURE instrument (€2.4 billion) and the Recovery and Resilience Mechanism (€400 million)”.
However, in 2021, general government deposits decreased by €8.3 billion, so, deducted from these deposits, public debt increased by €7.4 billion to €253.9 billion.
