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Government borrows record amount of credit
Updated: 30-Jul-2010
Foreign bank loans in May alone reached 3.6 billion Euros at the peak of the public debt crisis when Portugal was being attacked by the international markets and ratings agencies.
The amount of borrowing in the first half of the year corresponded to an increase of 441% on the same period last year, according to Bank of Portugal figures.
These were mainly short-term loans to ensure that the banks in Portugal had access to credit and funds and will be balanced out over the course of the year.
However, a further potential headache for Finance Minister Fernando Teixeira dos Santos was revealed last week when the latest BdP figures showed that Portugal’s State deficit grew by 6.3 per cent in the first half of 2010.
According to calculations, the treasury suffered a 7.763 billion Euros shortfall in the first six months of the year.
That means that the Government will have to make savage cuts in the second half of 2010 if it is to meet promised EU Budget Deficit targets which so far have been recognised by German Chancellor Angela Merkel who was “very pleased that Portugal had begun its budgetary consolidation”.
The Minister for the Economy was also upbeat, stating on July 21 that “the Government is firmly maintaining its objectives to reduce the deficit and that any variations are within expected limits”.
Teixeira dos Santos has until December to slash Portugal’s swollen public deficit from 9.3% to 7.3% of the GDP.
Portugal will have to pay a whopping 621 million Euros in interest payments to investors on the loans and treasury bonds Portugal has issued since January. C.G.
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