The era of the many found is over. Portugal is already paying more for the new debt
After years of the new Bank’s annual rate a beneficiary of European policy change from an annual peak of 5, which changed the policy value in 2011, to an annual peak of 5, the European average value bank, to a peak of year 5, which led to a change in value, to bankruptcy) to a minimum of 0.5% in 2020, the Republic today faces the end of this era of almost zero interest. It lasted until 2020, official data indicate.
According to figures from the agency (IGCP, which manages public debt), which is supervised by the Ministry of Finance, this swearing-in rate for new Portuguese women has started to rise. The increase is tenuous, but it signals that the time for ultra-low interest rates is over.
The government of the absolute majority of the PS, by António Costa, may not have great barriers to legislating in Parliament and should be able to approve its 2022 State Budget, which it intended in the general vote at the end of last year. But it will certainly face the barrier of rising interest rates.
Global weighted IGCP “the cost of the new average rate, being the average cost of instruments (BT), treasury bonds (OT), treasury bonds (OT), treasury bonds (OT), treasury bonds (OT) (OTRV) ) and average grades (MTN) were displayed in the corresponding year, weighted by amount and maturity”. This weighted average cost rose from 0.5% in 2020 to 0.6% in 2021. The downward climb lasted about seven years.
subscribe newsletter
As mentioned, it is a slight slight and, moreover, the value continues to be an adjustment, considering the history of recent years.
When Portugal formally ended the troika’s austerity and intervention program and returned to international markets (in 2014) it paid a weighted average of 3.6% for the new debt it issued. This will certainly become even more gross over time, despite the country having one of the highest efforts in Europe and the greater developed world, close to 130% of the product (GDP).
Last year, this burden added a little, to 127.5% of GDP, but it is still the amount owed: creditors have to pay substantial6 Portuguese taxpayers something like 29.6 billion euros.
The pivotal moment that triggered the drop in interest rates took place in 2012, when Mario Draghi, then president of the London ECB, made the famous speech that he would “do whatever it takes” to end the crisis and the speculative arguments to sovereigns. of the eurozone.
Over time, the ECB did what it promised. A monetary injector of new and very cheap money has been set into the eurozone banking systems. Buying the large amount of money according to the public was recognized by the dramatic debt as sovereign interest rates.
Like Portugal, feeling highly among the countries, feeling the interested and the sword, looked for the wall or the cases. Less interest means less pressure on the Budget as interest is an expense that reduces the balance sheet (or increases the deficit).
with this first rise in the cost of the same debt, the Treasury managed to generate savings in the interest of the Republic. The 2021 State Budget provided for spending 7.3 billion euros in interest.
The IGCP’s active debt management (which studies the best for its markets and carries out secondary operations to replace more expensive debts with cheaper ones, taking advantage of the debt environment for other markets or markets) will save other debt or in the markets) more than 300 million euros in 2021 against the budget.
But, there it is. Portugal last years. In nominal terms, the era was such that it paid a maximum debt of 8.4 billion euros in debt service in 2018.
In 2021, a bill was 1.5 billion lower. Also, the millions of euros in reward.
The inflection point in interest rates
In December, the ECB announced that it will start to discontinue some asset purchase programs that will likely allow cases to exist (such as those dedicated to combating the pandemic) and this week it reiterated the warning.
As a judge of prices that will be even less public (they continue to go from prices that are not yet public), from 20 million euros in October and other active directors in October, which, in practice, will be confirmed in October, which, in practice, will be fixed in a fee. rising cost of money in the euro area.
However, for some time now, the markets have established the policy of discounting this mandatory change at the ECB. That is why interest rates show the first signs of an increase in 2021, without Frankfurt having not changed anything, in practical terms, in its market operations.
Virtually all evaluators and analysts close to the country agree that the era of interest at balance prices is over and that from 2022 onwards, the trend is towards “normalization” of monetary policy.
Official source from the Ministry of Finance the fact that the debt burden fell to 127% of GDP last year (announced by the Bank of Portugal this past week) and that “the biggest ever reduction in public debt (in % GDP for the first time in a democracy that reduces in nominal value, that is reduced to 900 million euros of euros 2020”.
For the reduction of the reduction of public debt João Leão, this reduction is the best because “the resumption of the trajectory of reduction of the public debt fundamental for the international credibility of the republic and for the confidence in the economy”.
Reason? The current context is one of “normalization of economic policy at the European level” due to the increase in debt and its weight “allowing us to ensure greater security and stability and better financing conditions for the State, finances and families”, it is hoped.
What analysts say
Sarah Carlson, one of Moody’s vice presidents and Portugal’s chief analyst, says the Socialist Party’s victory “is a positive result because it removes the policy uncertainty that was associated with the previous contraption deal.” The term may be reflected in the debt quality rating and raise the sovereign rating. Carlson says the overwhelming majority are “credit quality positive.”
Furthermore, “a majority government is good for the Portuguese government’s ability to meet the goals of the Recovery and Resilience Plan (PRR)” as these projects “are crucial for Portugal’s growth prospects and for improving long-term term of the economy’s potential”.
In this sense, evaluated by Moody’s, notes that, in this new phase, debt reduction is more dependent on the “long-term growth potential of the country” and that this “is dependent on the full PRR implementation from 2022 to 2026”.
On 21 Portugal, an economy “should have a positive debt dynamics; on 21 December, the debt burden has already started to decrease” by the robust peso, which should follow a stronger growth trend that should be sequentially a sequence of this trend In the next years. “By 2024, we expect the increase in pandemic-related debt to have been completely reversed.”
The International Monetary Fund (IMF) is less optimistic when these developments: it says that it will only be in 2026 that the debt ratio will return to pre-pandemic levels of 2019.
The Mody’s’s analyst recalls the adoption of prudent policies” and that “the country entered the pandemic with a calculated position”. download more, so that it is possible to download 3.1%.
The Economist Intelligence Unit (EIU) group that follows Portugal also says that “the result of the attempts will guarantee stability during the next four years and allow the implementation of European funds”.
In addition to the prudence search, search the government search search for a priority for the search and record GDP numbers, search one of the levels that is over 130% of the EU year.
But the warning remains. “The characteristics of tourism, the viability of the economy will delay 2022, namely the dependence of tourism on the defined space and the low”. In all, “European policy measures to limit or risk a banking or sovereign debt crisis”, consider the EIU.
Recently, the research office of the Securities Market Commission (CMVM) also issued warnings about the interest and debt environment. In their new on risks they refer to the economic level of the “most indicators” in 202 are “the expected normalization of monetary policy”