Public debt falls for 4th consecutive month

 In Economy, News

Portugal’s public debt has decreased for the fourth consecutive month to its lowest value since January.

It had shrunk by €310 million in October to €271.1Bn — the lowest value since January this year, according to data released on Thursday by the Bank of Portugal (BdP). It was the fourth month in a row that the public debt fell.
“This reduction essentially reflects the maturity of sovereign bonds worth €0.5Bn”, explains the central bank in a communiqué sent to editors.
The ratio of public debt in the third quarter was 130.9% of GDP, below the 131.4% of GDP initially estimated — the GDP grew 4.2% in like-for-like terms in the third quarter.
It was the lowest since the 2nd quarter of 2020 when Covid-19 begin to impact Portugal. This ratio hit the highest value in the first quarter of this year, 139.1% of GDP, because of the GDP contraction as a result of the second confinement.
This fall in the public debt is explained not only by the increase in GDP (denominator), thanks to the bounce back of Portugal’s economy in the third quarter following the end of lockdown, but also because of a reduction in the stock of debt. With a higher GDP and a slightly lower debt stock, the ratio of debt — which is one of the main indicators to gauge the sustainability of the public debt — fell again.
The Government’s prediction is that by the end of the year, the ratio of public debt will stand at 126.9% of GDP, according to projections that are in the State Budget for 2022 (OE2022) which failed to get through parliament. This forecast had banked on an annual growth of the economy of 4.8% and a budget deficit of 4.3% of GDP in 2021.