Despite the Treasury paying off chunks of its IMF loan, Portugal’s public debt increased further to the end of July as it nears a landmark €250 billion.
According to the Bank of Portugal, the nation’s public debt stood at €249.165 billion at the end of July, an increase of €81 million over June which is not a steep month-on-month rise but sets a new record for a government that continues to announce to the world that its finances are in order.
The Bank of Portugal looks at public debt in relation to GDP and shows the June figure at 132.2%, down slightly from the record of 133.1% set in September 2016. This is expected to rise when the end of July figure is announced.
The central bank explains the worsening of the situation in July by "an increase in Treasury bills and other deposits with government of €0.6 billion and negative net issues of securities in the same amount."
Whatever that means, the situation is poor for an economy that is mean to be booming, led by record tourism receipts and well publicised Troika debt repayments.
One of the problems that affected the overall figure is the government losing its case against Santander Totta over the swaps contracts which have been deemed legal. The extortionate interest payments that had been on hold, must now be made which heaps €2.3 billion onto the negative side of the nation’s accounts.
Another is a boom in personal debt obligations as families take on loans, encouraged by a general feeling that the recession is over and interest rates are affordable.
The record debt figures were announced on the day that Moody’s is due to announce its all-important creadit rating for Portugal, currently stuck at ‘junk.’
Until Moody’s can be persuaded to lift its gloomy, but empirical, assessment of the nation's economic prospects, Portugal will remain closed to international investors wishing to buy government bonds.
