As Portugal’s prime minister goes out and about, telling all and sundry that the country’s finances are fine, and the finance minister shows the Eurogroup that the 2016 year-end deficit will be well below expectations, the Bank of Portugal has been obliged to tell the awful truth.
Portugal’s national debt grew by €9.5 billion last year.
This figure is way higher than we were led to believe at the beginning of the year and threatens to torpedo the government’s revised October 2016 projections.
According to the official data presented on Wednesday by the Bank of Portugal, public debt (according to the criteria used by Europe) reached an eye-watering €241.1 billion at the end of 20016.
This is an increase of €9.522 billion, up 4.1% on December 31st, 2015.
The Bank of Portugal can not yet show this figure as a percentage of GDP, as the year-end figures are not in, but if you assume that GDP reached the amount predicted by the government, the 2016 year-end debt represents 130.1% of GDP.
This figure is higher than the 129.4% of GDP that the Government estimated last October which itself was an upwards revision from the original estimate of 124.8%.
There may have been a miraculous economic boom during the last quarted of last year, but if not, we are stuck with a massive and internationally embarassing failure.
The reason is the government’s addiction to borrowing more and more money by issuing bonds. One reason for this was the expected cost of refinancing Caixa Geral last year, which now will not happen until later in 2017.
In the last open debate in parliament, the prime minister repeatedly was questioned about the value of Portugal’s public debt for 2016.
He failed to respond with a figure, but now we have it - and so does he.
