Public debt climbs to new ‘record’

On the day Moody’s rung the changes on Portugal’s junk rating, public debt was seen to have climbed to a dizzying new record: €249.2 billion.

The figure released by the Bank of Portugal was presented as only a “slight increase” on public debt for June.

It relates to July.

Sábado stressed that “there are good perspectives for a decrease in the weight of debt on the economy, but in value it doesn’t stop growing”.

Reasons include “greater uptake” of loans by families within the civil service, and “the effect of the deal between the State and Santander bank over swaps contracts”.

Negoçios online reported that there were still hopes on Monday that Moody’s would upgrade Portugal’s rating – which didn’t exactly happen, but things are ‘moving along’.

As financial papers explained, finance minister Mário Centeno is focused on winning an improved investment rating as this will open the doors to “large institutional investors” up till now barred from buying Portuguese debt.

What Moody’s did on Monday was “open the door to an upgrade within the next 12 months”.

Director Dietmar Hornung told RTP that his agency will be looking now at “how the 2018 budget materialises, how the economic growth performance (in Portugal) continues, how the overall European situation develops.

But in a positive scenario, he said “we could see an upgrade within 12 months”.

And that, says RTP, means that Portugal could finally say goodbye to its “junk rating” in 2018.

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