Portugal Debt Clock 

 

Or about:

Portugal Gross Government Debt (Maastricht Debt).
Calibrated from data from Direcção Geral do Orçamento e Banco de Portugal.
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More debt clocks:
US Gross Federal Debt Outstanding
US External Debt
Portugal Government Debt
Portugal External Debt

 

Portugueses government debt, 2008-2017

Portuguese government debt (Maastricht debt) keeps riding significantly ahead of Portugal's GDP, especially since June 2011, when right-wing Coelho took office as Prime Minister. The socialist Costa did not perform much better since he took over on November 2015, although the overall economy has shown some marginal improvement. The debt upward trend contrasts with the practically flat trend of GDP (trends are given by the slope of the linear regression lines in the chart). Such facts strongly suggest the vain conceitedness of both socialist and rightist claims that each one is more capable than the other to cure the country's financial ailments. In fact, exception made of the odd lucky hit, current instances of left and right policies cannot and will not bear anything but identically lame results — forget the labels.

The government leader does his best to persuade on his country fellows that the economy made its turn-around, and that a spectacular bonanza awaits the Portuguese around the corner. As the chart data points show, some assuagement should result from the recent softening of the debt, coupled with the slight progress of GDP. Alas, most of the benefits come from exogenous variables, inherently circumstantial and volatile. The avalanche of tourists who deserted other destinations deemed riskier to fill Portuguese hotel rooms and restaurant halls may suddenly wear out. The over-sufficient supply of cheap money allowing for lower interest rates on the debt may dry out on a whim of the European Central Bank.

Otherwise, government executives can't but do more of the same. They pursue an aggressive pruning of government expenses, mainly in the social sector, thus lowering the level of service in health, education, justice, transportation, utilities, practically everywhere. Government appropriates lavish spending only for the hush-hush military missions in Afghanistan, Kosovo and Central Africa, or to provide the owners of idle motorways and second-rate hospitals or the pointless bullet-train developers with juicy rents, or to finance futile projects expected to yield patronage opportunities to the political caste. A sure recipe for ruining the nation's strengths and to further plunge public and private agents in debt down the road. They further sell out the last remainders of public assets, thus emptying the nation's treasure chest. To conceal the harsh reality behind a smokescreen of pampering deceit, they manipulate the tax structure in a way to let the citizen believe that his disposable income remains untouched, only to strike him downstream with an orgy of benefit cuts and surcharges on consumption. No bright future for the commoner: either tightening the belt further, or seeking solace in private debt, or both.

Government debt is not inherently bad, but it may be a curse under some circumstances. Similar in this specif respect to private debt, government debt may dissolve all by itself if inflation runs into higher gear. Unfortunately for Portuguese finance's managers, inflation has been and will likely remain inconsequential for yet some time. Debt may also remain a lesser evil if income (fiscal income generated by a swelling GDP) grows at a fast pace. However, if and when debt runs far ahead of GDP, the amount of work and wealth that the nation has to put aside to pay for interest on the debt becomes an overburden, diverting resources from other more advantageous uses: well-being, public health, education, infrastructure, social solidarity, innovation, employment, etc. In the case of Portugal, not only debt runs far ahead of GDP, but it also runs quite faster (the slope of the debt regression line is 970, against an irrelevant 66 for GDP, for the period covered in the chart). This simply means that a chunkier slice of wealth is being allocated to interest remuneration and loan payback, in pure waste for the nation. Quite a dismal scenario. Government cash-flows will be hard pressed to sustain the current set-up for much longer.

Another issue is the usage made of the debt. The general rule should be to use debt to finance activity whose rate of return is greater than the interest rate to be paid to debt holders. In the case of Portugal, and in a context of low inflation, this has not been the case, with the result that the growing debt has been inducing nothing but further belt-tightening and overspread impoverishment.

 

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