The government skirts around the subject, the PM assures us all is on track and the Finance Minister predicts reductions - but the fact is that Portugal’s public debt has attained an all time high.
According to data released today by the Bank of Portugal, the nation’s debt at the end of October stood at an astonishing €251.1 billion, 124.6% of GDP in a country of just over 10 million people.
One of the reasons for this record figure is that the government has needed to raise yet more money to pay its way, "In October 2018, public debt stood at €251.1 billion, increasing by €2.1 billion at the end of September, mainly due to debt issues of €1.9 billion," reads the Bank’s statement.
The Prime Minister, António Costa, announced that Portugal will pay off its IMF debt of €4.6 billion by the year end, "With the same determination with which we have governed..."
Portugal is increasing its 'liquidity cushion', i.e. borrowing more, so as to repay the IMF loan which on paper will reduce slightly the amount the country owes.
The final payment to the IMF means an end to the €26.3 billion loan, granted as part of the Troika emergency bail-out.
But to pay off the last tranche, the State is simply issuing more IOUs, albeit at a lower interest rate. On November 14th, there was another auction of bonds with maturities of five and ten years, specifically to raise the money to pay the IMF. None of this is reflected in today’s figures which run only to the end of October.
Public debt is well above that projected by the Government for the year. In the 2018 State Budget, António Costa's Executive went for a year-end public debt of 121.2% of GDP. For next year, the projection is for a fall to 118.5% of GNP - for 'projection' read 'guess.'
The final payment to the IMF means at least means an end to the €26.3 billion loan as part of the Troika bail-out.
To pay off the last IMF tranche, the State is simply issuing more paper, albeit at lower interest rates. On November 14th, there was another auction of bonds with a maturity of 5 and 10 years, specifically to raise the money to pay the IMF.
Whichever way you look at it, these borrowings are huge for such a small country but politicians hate to live within their means and their accountants are adept at ensuring much of these borrowings remains off balance sheet, hidden away in the PPP deals that the nation’s taxpayers are saddled with for decades to come.
Should the real picture ever be painted and the voting public made aware of the real state of the nation's finances, the fallout could threaten whichever party happened to be in power.
