Portugal: Net external debt falls to 50% of GDP in June, lowest since 2005

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Portugal: Net external debt falls to 50% of GDP in June, lowest since 2005

4:54 CAT | 21 Aug 2024

File photo: Lusa

Portugal’s net external debt fell to 50.0% of Gross Domestic Product (GDP) in the first half of the year, the lowest ratio since the end of 2005, to €136.9 billion, the Bank of Portugal (BdP) announced on Tuesday.

This compares with a debt of €142.7 billion at the end of 2023, equivalent to 53.8% of GDP.

In a note released yesterday, the BdP also notes that Portugal’s International Investment Position (IIP) showed its least negative ratio in the first half of the year since the end of the first half of 2005.

Portugal’s IIP remained negative but rose to -66.0% of GDP (-€180.9 billion) at the end of June 2024, compared to -72.5% of GDP (-€192.5 billion) at the end of 2023.

According to the central bank, the main contributor to this change in Portugal’s international investment position was the positive change in net foreign assets of €4.1 billion, reflected in the financial account balance for the first half of 2024.

Positive price changes of €7.5 billion also contributed, reflecting the appreciation of financial assets (€4.7 billion), namely monetary gold (€3.8 billion), and the devaluation of liabilities (€2.8 billion), mainly in equity instruments (€1.7 billion).

The change in the IIP also reflected positive exchange rate changes of €800 million, which essentially resulted from the appreciation of net foreign assets denominated in US dollars (€900 million).

According to the BoP, of the 6.5 percentage point reduction in the negative ratio of the IIP to GDP, 4.3 percentage points came from the nominal change in the IIP and 2.2 percentage points from GDP growth.

Source: Lusa