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Public Debt Falls to Pre-Troika Levels for the First Time

“The public debt stabilized in June, at 280.1 billion after an increase of 7.5 billion in the first half of the year. But the weight in relation to GDP fell to the lowest value since March 2011” Public debt fell to pre-troika levels for the first time. It reached June at 111.2% of Gross Domestic Product (GDP), the lowest value since March 2011, when Portugal was being pressured by the markets and a month before the announcement of the request for international financial assistance. In absolute terms, public debt stabilized at 280.1 billion euros in June, corresponding to an increase of just 100 million compared to the previous month, according to data released by the Bank of Portugal. Compared to December last year, there was a significant jump of 7.5 billion, reflecting the rush of families to obtain Savings Certificates. An upward trajectory that will be corrected in October, when Portugal has to return a check for 9.4 billion to investors, relating to a line of Treasury bonds that matures that month. Even so, the strength of the economy in the first half of the year helped to lower the weight of public debt in relation to GDP to lows of more than 12 years, although absolute public debt remained close to the historical maximum record of 280.4 billion, observed in May of 2023.

On the other hand, in relation to the peak of 138.2% of GDP reached in March 2021, in the middle of the pandemic, it has already fallen by 27 percentage points and the Government's perspectives point to it continuing to fall in the coming years. In an interview, the Secretary of State for Finance, João Nuno Mendes, revealed that Portugal should lower the 100% threshold next year, taking it out of the group of most indebted economies in the Euro Zone. Furthermore, in the first quarter of the year, Portugal recorded the third biggest fall in public debt and joined Spain and France. Currently, the ten-year Portuguese bond rate trades at 3.243%, below the Spanish (3.522%) and Italian (4.115%), for example, and with a risk premium (spread) of 77.2 basis points compared to to German debt. Public debt reflects the level of indebtedness of public administrations and comprises their responsibilities vis-à-vis the remaining resident sectors of the economy and the rest of the world. According to the Bank of Portugal, public administration deposits increased by 1.1 billion euros in June. Therefore, after deducting these deposits, net public debt decreased by one billion to 255.4 billion. Feel free to call; text or e-mail. But the best way to connect with us is via a Zoom call. I’ll walk you through Portugal using Google Maps; show you the best Cities or communities and neighborhoods that match your ideal lifestyle and budget and go over the moving and buying process as well as Visa process to establish residency. Source: Jornal de Negócios Link to schedule call on Calendly

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