The Bank of Portugal has just released April’s Government debt data.     

The main highlights are the following:

1 – Gross Government debt is now at €272,726Mn; +4.0%YoY; -0.9%MoM and 134.9% of GDP (assuming nominal GDP 2Q21: +1%QoQ) vs. 12MMA (12 month moving average) 132% and 3MMA of 136%;

2 – Net Government debt (after the deposits of Public Administration) is at €253,4Mn; +6.9%YoY; +1.17% MoM and 125.3% of GDP vs. 12MMA of 121% and 3MMA: 125%.

April’s performance reflects the increase in the budget deficit, despite the decrease in gross government debt, the reason is that Deposits went down sequentially by roughly €5.5Bn to €19.3Bn; in fact, already below the 12MMA.

Summing up, Deposits could still come down to levels close to €15Bn/€16Bn, a more common figure in the past; which means lower Gross Debt; however, net debt is increasing at a pace even slightly higher than the budget deficit.

So, assuming Nominal GDP in 2021 +5%YoY; 5% cash deficit and Deposits at YE21: €16Bn; it would mean Gross debt close to 128%/129% of nominal GDP/21; almost in line with the Government target of 128%. 

Source: Bank of Portugal, INE, AS Independent Research