After falling to 99.1% of gross domestic product (GDP) at the end of last year, the public debt ratio in Portugal returned, after three months, to a value above 100%. The expectation is, however, that in the coming quarters this indicator may return to a downward trend.
According to data presented this Thursday by the Bank of Portugal, public debt reached, at the end of last March, 270.8 billion euros, a value equivalent to 100.5% of GDP.
The country thus returns to a situation in which public debt is higher than GDP, after at the end of last year having, for the first time since 2010, fallen below this level, recording a public debt equivalent to 99.1% of GDP. .
The rise in this ratio in the first quarter of the year, following a decline in the previous quarter, is a result that has become common over the years.
The main reason why this happens is the concentration at the beginning of the year of a substantial part of Treasury Bond issues carried out by Portugal.
In 2017, 2018 and 2019, despite being years of substantial reduction in the value of the debt ratio, there was an increase in the first quarter. And, last year, a period in which public debt decreased by 13.3 percentage points, the ratio remained practically unchanged during the first quarter.
This year, that happened again. After at the end of last year Having practically not made any new issues (and having anticipated the amortization of several debt securities), the Treasury began this year with a series of issues.
In addition to carrying out a syndicated debt issue of 4 billion euros in the first days of the year, nine more Treasury Bond (OT) issues were carried out throughout the first quarter, totaling 5125 million euros. In compensation, an OT of around 6 billion euros was amortized, which reached maturity in February.
The OTs launched in the first quarter of the year, worth 9,125 million euros, represent almost two thirds of the total issuances foreseen in the Financing Program of the Portuguese Republic for the total of 2024, whose value amounts to 13,900 million euros.
If the financing program does not have to be changed and the emissions profile throughout the year is similar to the past, the expectation is that, in a scenario in which the State’s financing needs do not rise much higher than expected, the debt ratio begins to fall in the coming quarters, returning once again to a level below 100% of GDP.
At the end of last year, in addition to the postponement of new issues and the early amortization of some debt securities, the public debt ratio was also pushed down by the increase in investment by Social Security and Caixa Geral de Aposentações funds in securities debt of the Portuguese State.
According to the Technical Budget Support Unit (UTAO) of the Assembly of the Republic, the exposure of these funds to Portuguese public debt increased, at the end of 2023, by 12,100 million euros compared to the same period last year. This helps to reduce the debt ratio, because public debt securities held by bodies that belong to Public Administrations are, according to European rules, not taken into account when calculating this indicator.
There is still no data available to verify whether, in the first quarter of this year, there was any significant change in the exposure of Social Security and CGA funds that could also have had an impact on the level of public debt recorded.
