Deficit stood at 1.9% in the first half of 2017


Page created: Wednesday, 11 October 2017 12:00 GMT | Updated: Wednesday, 11 October 2017 16:21 GMT

Budget Execution   Debt-to-GDP ratio  Maastricht   Ministry of Finance  Public Debt   Public Deficit  Public Finances  Standard & Poor’s

Public debt increased by 1 300 million euros in August compared with the previous month

The General Government deficit stood at 2 034 million euros until August, which represents an improvement of 1 901 million euros compared to the same period of 2016. The Portuguese State direct debt increased by 0.6% in August 2017. The public debt (Maastricht criteria) amounted to 250 400 million euros in the second quarter of 2017. Standard & Poor’s upgraded the Portuguese debt rating from BB+ to BBB-, raising it above the level considered “junk”. The Government’s targets for this year are, in terms of the government deficit and public debt as a percentage of GDP, of 1.5% and 127.7%, respectively.

According to INE, the deficit as a percentage of GDP stood at 2.1% in the second quarter of 2017, 0.7 pp lower than in the same period of last year. Considering the first half of 2017, the deficit stood at 1.9% of GDP, a 1.2 pp improvement on the deficit recorded in the first half of 2016. This value is below the government’s 1.5% target for the whole of 2017.

According to the budget execution until August 2017, the General Government deficit, on a public accounts perspective, stood at 2 034 million euros, which represents an improvement of 1 901 million euros compared with the same period of 2016. This improvement resulted from the increase of 4.3% in revenue being higher than the 0.4% increase in expenditure. The primary balance exhibited a surplus of 3 736 million euros, which is 2 087 million euros higher than the figures for the same period last year.

As reported by the Portuguese Treasury and Debt Management Agency (IGCP), the Portuguese State direct debt stood at 244 636 million euros at the end of August 2017, which represents an increase of 0.6% from the previous month and 3.95%  from 2016.

The IGCP, on 13 September, auctioned 850 million euros in Treasury Bonds, with a maturity of 10 years and a yield of 2.785%, the lowest rate since 2015.

The State obtained the lowest yields ever recorded on the Treasury Bills auction of 6-month and 12-month maturity, maintaining the trend observed in the auctions carried out in 2017.  The  IGCP  auctioned 1 750 million euros in Treasury Bills, with 1250 million euros maturing at 12 months with a yield of -0.345 and 500 million euros maturing in 6 months with a yield of -0.363%. In the last comparable auctions, the State obtained yields of -0.259% and -0.292%, respectively.

  • According to the data published by the Portuguese Central Bank (Banco de Portugal), the public debt (Maastricht criteria) stood at 250 400 million euros in August 2017, an increase of 1 300 million euros from last month. This increase is due to the net issuance of securities amounting to 2 400 million euros and a decrease of 1 200 million euros in loans, mainly through the early repayment of loans from the International Monetary Fund (800 million euros)

    Considering the debt-to-GDP ratio, the latest released indicator was in June and stood at 132.1%. According to the Ministry of Finance, this ratio, ranked the fourth highest in the world, is estimated to fall to 127.7% of GDP in 2017. Achieving this objective would translate into the highest debt reduction effort in the last 19 years.

On 15 September, the Standard & Poor’s rating agency became the first of the top three financial rating agencies to upgrade, from BB + to BBB- , its outlook on Portuguese debt and raising it above the level considered “junk”.

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