Government debt in the eurozone is at its highest levels since the euro was introduced in 1999, reaching 92% of GDP last year.
According to Eurostat, only four of the 19 members of the single currency are within their debt limit of 60%. They are Denmark, Germany, Estonia and Luxembourg.
There were 16 countries which had government debt ratios higher than 50% of GDP.
The highest debt ratio was in Greece where the public debt is 177% of the country’s economic output.
Italy had the second highest debt ratio of 132%.
Portugal was close on the heels of Greece and Italy with a debt ratio of 130%. The official figures indicates the country is the third most indebted nation in the euro area.
Eurostat is expressing a reservation on the quality of the data reported by Portugal in relation to the capitalisation of Novo Banco.
In the third quarter of 2014, the Portuguese Resolution Fund injected €4.9 billion (2.8% of GDP) into Novo Banco.
The transaction provisionally was recorded by the Portuguese authorities as a financial transaction for its full amount, due to ‘lack of information,’ but without any impact on the government deficit.
The final impact of the transaction will be assessed by Eurostat in cooperation with the Portuguese statistical authorities during the coming months following the outcome of the privatisation process of Novo Banco and the final amount which thePortuguese government obtains from the sale.
This will most likely result in an increase of the government deficit as it is unlikely that the amount paid for Novo Banco will be the €4.9 billion needed.
