Public sector debt up by €2.9Bn in May, while private sector debt increases by €3.6Bn

The public sector was the main driver for the rise in non-financial sector debt in May 2026, increasing by €2.9Bn, according to data released today by the Bank of Portugal.

The Bank of Portugal published today (Thursday) updated statistics on non-financial sector indebtedness for May 2026, showing an increase of €6.4 billion compared to the previous month.

In May 2026, accumulated non-financial sector indebtedness (general government, companies, and households) stood at €883.2Bn. Of this total, €497.0Bn was attributable to the private sector (private companies and households) and €386.3Bn to the public sector (general government and public enterprises).

Public sector indebtedness rose by €2.9Bn, driven primarily by general government (+€1.4Bn), the financial sector (+€0.6Bn), households (+€0.5Bn), and overseas debts owed to\ the rest of the world (+€0.5 billion).

The change regarding general government mainly reflected the increase in deposits held with the Treasury (+€1.0Bn).

Meanwhile, financing obtained from the financial sector and from abroad increased, primarily through investment in Portuguese public debt securities. The rise in household debt stemmed mainly from the subscription of savings certificates.

Private sector debt rises: 4.4% for companies and 9.8% for households in May

Private sector debt increased by €3.6Bn. Household debt rose by €1.4Bn, driven essentially by housing loans (+€1.2Bn).

At the same time, private company debt increased by €2.2Bn, reflecting a rise in financing from abroad (+€1.6Bn) and the financial sector (+€0.5Bn), primarily in the form of loans (+€1.4Bn).

In terms of annual rates of change, private sector corporate indebtedness grew by 4.4% in May 2026 compared to the same month of the previous year, down from the 4.5% recorded in April. Household indebtedness rose by 9.8% year-on-year, an increase of 0.1 percentage points compared to April.
Portugal’s general accumulated government gross debt stands at roughly €283.18Bn, which accounts for approximately 91.0% of the country’s nominal GDP. This marks a significant recovery from the peak levels experienced during the European sovereign debt crisis, placing the debt ratio below the 100% threshold.

Despite this improvement, however, the Governor of the Bank of Portugal, Álvaro Santos Pereira has dismissed the idea, often portrayed in overseas newspapers, that Portugal has enjoyed an economic miracle in recent years.

The Governor of the Bank of Portugal believes the economy has been growing “modestly” and that reforms are needed to boost growth. Regarding labour reform, he advocates a model that offers greater flexibility while simultaneously providing more protection for workers.

“At the moment, with growth rates of around 2%, we are talking about an economy that is clearly faring much better than it was in the years following our adoption of the euro—through the period leading up to the financial crisis and for some time thereafter. Does this mean we are an economic miracle? No, we are not. As an economy, we are growing at a moderate pace,” he argued in an interview with Observador a week ago.

Sources: Observador/Negócios