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Pessimism increases as public debt leaps by €1.6 billion “just in May”

Pessimism over the Portuguese economy has been amplified today following new figures from the Bank of Portugal showing public debt has increased by €1.6 billion just in May.

Standing now at €237.6 billion, the increase has been dubbed by national media as the largest this year, taking Portugal’s debt to a new historic maximum.

“The weight in terms of percentage of GDP is not known”, adds noticiasaominuto, breaking the news, “as GDP figures for the second three-month period of 2016 have still not been officially published”.

But coming in the wake of “great scepticism” conveyed recently by the IMF – not to mention inflammatory warnings from German finance minister Wolfgang Schauble earlier this week (click here) – the Bank of Portugal’s news “has done nothing to help dampen pessimism”, says the website.

Jornal de Negócios has followed the story, adding that in the last three months, public debt has actually increased by €6.5 billion.

But the paper at least carries a graph to show debt is still way ahead of the situation in May 2014, though slightly worse than it was when the PS government took over from PSD leaders in November 2015, pre- the collapse of Banif.

Meantime, news from the banking sector is also far from uplifting.

Talking at a seminar this week, Bank of Portugal governor Carlos Costa has pointed to “less assets, more underperforming loans and a freefall in profitability”.

It is a picture that is duplicated in other southern nations, but leading now to articles in the financial press suggesting “a new European crisis” could be on the way.

natasha.donn@algarveresident.com