Portugal escapes 10- and 30-year interest rate hikes, says Secretary of State for Finance
The Secretary of State for Finance, João Nuno Mendes, warned this Friday that interest rates for 10 and 30 years are increasing, but not so much in Portugal “thanks to the excellent performance achieved” in the country.
“Interest rates are increasing. Fortunately they have increased even less in Portugal than in other countries thanks to the excellent performance of our country and the debt trajectory that we are providing”, said João Nuno Mendes in the general appreciation debate , of the Government’s draft law on the State Budget for 2022 (OE2022), which took place today at the Assembly of the Republic.
The government official appealed that Portugal was indebted “in the market at 0.6% memory until August”, but “10 years or 30 years, at this moment, as a result of world economic evolution, what is happening is that these rates are going up”.
“We have to have space, we have to have prudence from a personal point of view,” warned the ruler in parliament.
Newsletter for subscribers
Interest expenditure will decline by 5.4% in 2022, from 7,295 million euros this year to 6,901 million in 2021, representing 3.1% of GDP, according to the State Budget report for 2022 (OE2022).
“Interests continue to decrease (-5.4%) due to the stability of interest rates in the secondary market, allowing the ‘rollover’ [substituição] of debt reveals savings in interest charges, offsetting the increase in the ‘stock’ of debt”, can be read in the OE2022 report.
According to the tables present in the document, an expenditure of 7,295 million euros in 2021 represents 3.4% of the Gross Domestic Product (GDP), and that of 6,901 million in 2022 represents 3.1% of GDP.
In Central Administration (without the Local and Regional), “the expenditure on interest and other charges represents 8.5% of the effective expenditure”, “with emphasis on the charges of the direct public debt of the State, which represents a weight of 94.4% in the structure of the grouping, highlighting mainly the interests related to Treasury Bonds”.
In the Regional Administration, interest charges reach 180.3 million euros in 2022, increased from the 145.9 million estimated for this year.
Public debt management “has 6,373 million euros to pay public debt charges in 2022”, a decrease of 3.7% and has “a total consolidated expenditure of 111,816.6 million euros”.
Today’s hearing took place at a time when the Government is still negotiating support between the parties of the left to enable the general approval of the OE2022 proposal, whose vote will take place on 27 October.
The proposed proposal that minister João Leão delivered to parliament on October 11, points to a growth of the Portuguese economy of 4.8% in 2021 and 5.5% next year.
In the document whose assessment in general begins today – on the 25th the minister of Labour, Solidarity and Social Security will be heard – the executive estimates that the deficit of national public accounts should remain at 4.3% of GDP in 2021 and fall to 3.2% in 2022, also predicting that the Portuguese unemployment rate will fall to 6.5% next year, “reaching the lowest value since 2003”.
The public debt should reach 122.8% of GDP in 2022, compared to an estimate of 126.9% for this year.