Portugal’s debt hits new €724.3Bn record

Portugal’s total debt increased €4.6Bn in April hitting a new record of €724.3Bn.

Portugal’s public sector was the main reason why the debt ballooned as a result of debt issuance (sovereign bonds) via a banking syndicate.

“In April 2018 indebtedness in the non-financial sector (public sector and private consumer debt) stood at €724.3Bn, of which €322.5Bn was from the public sector and €401.8Bn from the private sector” states the Bank of Portugal’s statistical bulletin.

The value is the highest since the BdP started the index in December 2007.  The debt amount from the non-financial sector is almost five-times the annual GDP.

No data was issued for April, but in March, the last set of figures issued by the BdP, debt represented €369.6% of GDP.

In April Portugal issued €3Bm of 15-year sovereign bonds. This financing will enable the treasury to raise part of the amount necessary to redeem debt worth €6Bn.

In other words, the Government is taking advantage of low interest rates to raise capital (in effect debt) to pay off other debt.

In terms of the private sector, private consumer debt rose a modest €0.1Bn while company debt rose €0.2Bn but was cancelled out by a reduction in debt owed to the financial sector (banks).