Portugal’s net debt imbalance falls to 35.7% of GDP in March

Portugal’s net external debt fell to 35.67% of GDP in the first quarter of this year, the lowest level since the second quarter of 2001, representing 111 billion euros, the Bank of Portugal (BdP) announced today (Friday, May 22).

In a note released today, the Portuguese central bank points out that net external debt as a percentage of Gross Domestic Product (GDP) has decreased compared to 42.96% at the end of 2025 and compared to 36.15% in the previous quarter – estimated at 110.9 billion euros.

Despite a higher debt value than in the previous quarter, the Bank of Portugal justifies this decrease in the ratio with the increase in GDP. This is the lowest ratio since the second quarter of 2001, when it stood at 34.31%.

A country’s net external debt is the total amount of debt its residents (including the government, businesses, and citizens) owe to foreign lenders, minus the total amount of debt instruments, such as bonds, they own that are issued by foreign entities.

This indicator corresponds to net liabilities abroad – the symmetrical counterpart to the International Investment Position (IIP) – excluding equity instruments, gold bullion, and financial derivatives.

In the same note, the Bank of Portugal (BdP) notes that Portugal’s IIP – the balance between financial assets abroad held by residents and liabilities issued by residents and held by the rest of the world – presented a ratio of -50.5% in the first quarter, compared to -50.2% in the previous quarter and -57.1% in the same period last year.

In nominal terms, this estimates Portugal’s international investment position at approximately -€157.3 billion, compared to -€154.1 billion at the end of 2025.

Of the 0.3 percentage point increase in the negative IIP to GDP ratio, -1.0 percentage points are attributed to the reduction in the IIP balance, while +0.7 points are due to the increase in GDP..

Source: Jornal Ecónomico/BdP; Credits:Bank of Portugal