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November 17, 2017
PORTUGAL:
THE WAY FORWARD
Portugal has turned the corner from the European crisis, with economicrebalancing and structural reforms underpinning the recovery
Source: EC, IGCP
2
Executive summary
1. Economic revitalization, fuelled by real GDP growth and employment creation
2. External rebalancing, through strong exports performance and external deleveraging
3. Private sector turnaround, resulting from improved profitability and balance sheet strengthening
4. Fiscal stabilization, with sizable fiscal adjustments and primary surplus achieved
5. Resilient public debt structure, enhancing shock-absorptive capacities
Outline
2
6
10
14
18
-15
-10
-5
0
5
1995 1998 2001 2004 2007 2010 2013 2016
% la
bo
ur
forc
e
% G
DP
Current account balance (LHS)Primary balance (LHS)Primary balance, excl BES/Banif resolutions (LHS)Unemployment rate (RHS)
Boom Slump CrisisBalancedGrowth
EC f
ore
cast
s
Outline
3
1.
1. Economic revitalization
2. External rebalancing
3. Private sector turnaround
4. Fiscal stabilization
5. Resilient public debt structure
1.
1. Economic revitalization
Economic revitalization in evidence, underpinned by structural reforms
Source: Eurostat
4
[Real GDP, YoY %]
Growth picked up since the 2nd half of 2016 Unemployment back to pre-crisis level
[% labor force]
Source: Eurostat
1,8%Portugal 2,5%
3,1%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
Euro area Italy Portugal Spain
8,9%
Portugal
8,8%
16,8%
11,1%
3%
6%
9%
12%
15%
18%
21%
24%
27%
Euro Area Portugal Spain Italy
1. Economic revitalization
Stronger foundations for GDP growth (1/2)
[GDP YoY % and pp] [Private consumption and Consumer confidence]
Source: Statistics Portugal Source: Statistics Portugal
5
Sustainable domestic and external demand Improved confidence behind private consumption
YoY % Index
3,0
-15
-10
-5
0
5
10
Private consumption Public consumption
GFCF Change in inventories
Exports Imports
GDP
-60
-51
-42
-33
-24
-15
-6
3
-8
-6
-4
-2
0
2
4
6
Private consumption (YoY %, LHS)
Consumer confidence (index, RHS)
1. Economic revitalization
Stronger foundations for GDP growth (2/2)
Robust exports growth … … supported by a shift in investment pattern
[Contributions to YoY real Exports growth, %] [Contributions to YoY real GFCF growth, %]
Source: Statistics Portugal Source: Statistics Portugal
6
-20
-15
-10
-5
0
5
10
15
Exports of services
Exports of mineral products
Exports of goods excluding mineral products
Exports of goods and services
-24
-20
-16
-12
-8
-4
0
4
8
12
16
Others Construction
Transport equipment Other machinery and equipment
Gross fixed capital formation
Labor market supported by growth and reforms
Job creation in more productive sectors
[% of total population] [Contributions to YoY employment growth, %]
7
1. Economic revitalization
Both employment and participation rates up
Source: Statistics Portugal Source: Statistics Portugal
[% of total population]
-6
-4
-2
0
2
4
6
2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1
Services
Mining, manufacturing, electricity, gas and construction
Agriculture, forestry and fishing
yoy
54
55
56
57
58
59
60
61
62
72,0
72,5
73,0
73,5
74,0
74,5
75,0
Participation Rate (LHS)
Employment rate (RHS)
Structural reforms have been key to sustain a balanced growth environment
8
What has been achieved: Underway:
1. Economic revitalization
• Improved efficiency of credit allocation by banks
• Resolution Fund: State loan extended for up to 30y, with maturity contingent on final outstanding amount (after NB sale)
Financial sector
• Social Security reform
• Improved effectiveness: reduction of civil servants (-10% since 2011) and SOEs restructuring
• Simplified tax compliance + reduced fraud and fiscal evasion
• New Budgetary Framework Law
• Privatization program
• Judicial system reform
Public sector
• Reduced firms’ administrative burden (e.g. licensing)
• Lower costs of context (e.g. communications, railways, ports)
• Rental market reform
Product market
• Reduced severance payments and unemployment benefits
• More flexible working arrangements
Labor market
• Program Capitalizar: promote reduction of indebtedness levels and increase capital holdings
• Initiative Indústria 4.0: designed to revitalize most traditional sectors (agroindustry, auto, fashion, retail and tourism)
• Program Semente: new fiscal framework to promote Start Up investment
Corporate sector
• Program Simplex+: improve efficient use of public resourcesand simplify administrative burden
• Spending review focused on: (i) health and education sectors; (ii) procurement; (iii) real estate; and (iv) SOEs
• Automatic income declaration for Personal Income Tax
Public sector
• NPLs: working group preparing measures to facilitate debt restructuring, including fiscal treatment of write-offs
• Improve efficiency of insolvency and debt restructuring frameworks
Financial sector
1. Economic revitalization
Converging expectations around accelerating growth
Portugal exceeded expectations in early 2017, which prompted a significant upward revision of growth forecasts
Sources: Statistics Portugal, Ministry of Finance, Banco de Portugal, Public Finance Council, International Monetary Fund, and European Commission
9
October 2017 June 2017
2015 2016 2017P 2018P 2017P 2018P 2017P 2018P 2017P 2018P 2017P 2018P
Real GDP (yoy%) 1.8 1.5 2.6 2.2 2.5 2.0 2.7 2.1 2.5 2.0 2.6 2.1
(previous forecasts) 1.8 1.9 (2.5) (1.7) (1.7) (1.7) (1.7) (1.5) 1.8 1.6
Private Consumption 2.3 2.1 2.2 1.9 1.9 1.7 2.2 2.1 2.2 1.8 1.9 1.6
Public Consumption 1.3 0.6 -0.2 -0.6 0.3 0.6 0.7 0.0 0.6 0.5 0.4 0.5
GFCF 5.8 1.6 7.7 5.9 8.0 5.3 9.1 5.2 6.9 5.7 8.1 5.3
Exports 6.1 4.1 8.3 5.4 7.1 6.8 7.9 4.0 7.6 5.2 8.0 7.3
Imports 8.5 4.1 8.0 5.2 6.9 6.9 7.6 4.1 7.3 5.1 8.0 7.2
Contributions to GDP growth (pp)
Domestic demand 2.8 1.6 2.7 2.2 2.5 2.2 2.8 2.3 2.6 2.2 2.6 2.0
Net exports -1.1 -0.1 -0.1 0.0 0.0 -0.2 0.0 -0.1 -0.1 -0.1 0.0 0.0
External sector (% GDP)
Current account -0.9 0.1 -0.1 0.1 - - 0.3 0.3 0.4 0.3 0.1 0.2
of which Goods and Services 0.6 0.9 0.9 1.0 1.7 2.2 0.9 0.7 - - - -
Current and Capital account 0.3 1.0 0.8 1.0 1.8 2.4 1.3 1.3 - - - 1.0 1.1
Unemployment (% labor force) 12.4 11.1 9.2 8.6 9.0 8.2 9.2 8.5 9.7 9.0 9.2 8.3
Prices (yoy%)
GDP deflator 2.0 1.4 1.3 1.4 - - 1.3 1.8 2.2 1.7 1.3 1.4
HICP 0.5 0.6 1.2 1.4 1.6 1.4 1.6 1.9 1.6 2.0 1.5 1.4
October 2017
Macroeconomic Scenario
Min Fin: 2018 State
Budget Report
INE
Statistics Portugal
International
Monetary Fund
October 2017
Portuguese Public
Financial Council
September 2017
European
Commission
November 2017
Banco de Portugal
Outline
10
2.
1. Economic revitalization
2. External rebalancing
3. Private sector turnaround
4. Fiscal stabilization
5. Resilient public debt structure
2. External rebalancing
Large imbalances have been successfully addressed, paving the way forsustainable growth
11
[% GDP]
From chronic external deficits to sustained surpluses Significant gains in exports market share
Portugal
80
90
100
110
120
130
20
07
Q2
20
08
Q2
20
09
Q2
20
10
Q2
20
11
Q2
20
12
Q2
20
13
Q2
20
14
Q2
20
15
Q2
20
16
Q2
20
17
Q2
Portugal Germany Spain Italy
[Index 1Q2007=100]
Source: Statistics Portugal Source: Eurostat
20
24
28
32
36
40
44
-12
-10
-8
-6
-4
-2
0
2
19
96
Q2
19
97
Q2
19
98
Q2
19
99
Q2
20
00
Q2
20
01
Q2
20
02
Q2
20
03
Q2
20
04
Q2
20
05
Q2
20
06
Q2
20
07
Q2
20
08
Q2
20
09
Q2
20
10
Q2
20
11
Q2
20
12
Q2
20
13
Q2
20
14
Q2
20
15
Q2
20
16
Q2
20
17
Q2
Imports of goods and services (rhs)
Exports of goods and services (rhs)
External balance of goods and services
Exports diversification improves resilience to external shocks
Broader sectoral diversification
[Goods exports by sector, %]
Source: Statistics Portugal
12
2. External rebalancing
Source: Statistics Portugal
Geographical diversification sustaining exports growth
[Goods exports by destination, YoY 3mMA %]
4 4
6
7
3 45
65
19
14
20
57
8
12
8
4 3 45
10
12
15
6
8 8
12
9
3 34 4
1011
15
Ch
em
ical
s (i
ncl
. Ph
arm
a.)
Pla
stic
s an
d R
ub
be
r
Bas
e M
eta
ls
Fish
, Fru
its,
Ve
g.,T
ob
aco
an
d W
ine
Min
era
l Pro
du
cts
Ce
me
nt,
Cer
amic
an
d G
lass
Wo
od
an
d C
ork
Foo
twar
e an
d o
ther
pro
du
cts
Pu
lp o
f W
oo
d a
nd
Pap
er
Text
ile P
rod
uct
s
Ve
hic
les
and
par
ts, A
ircr
aft
Elec
. an
d M
ec. M
ach
iner
y
2000 2010 2016
-10
-5
0
5
10
15
20
25
30
Germany Spain France
UK Others Intra-EU US
Africa Others Extra-EU Exports
Sustained productivity gains leading to higher competitiveness
Labor productivity: ongoing improvement ULC: down from a relatively modest competitive position
[2001 = 100] [2001 Q1 = 100; 12m MA]
Source: Eurostat Source: Eurostat
13
2. External rebalancing
Portugal
90
95
100
105
110
115
Euro area (19 countries) Spain Italy Portugal
Portugal
90
100
110
120
130
140
150
Spain Italy Portugal Euro Area
2. External rebalancing
Improving net external debt position
Reversed historical net borrower position … … leading to improvement in NIIP
[Current & capital account, % GDP: 4QMA] [Net International Investment Position, % GDP]
14
-18.2pp
Source: Eurostat Source: Eurostat
Portugal
1,92,12,6
-12
-10
-8
-6
-4
-2
0
2
4
Jun
-01
Mar
-02
De
c-0
2
Sep
-03
Jun
-04
Mar
-05
De
c-0
5
Sep
-06
Jun
-07
Mar
-08
De
c-0
8
Sep
-09
Jun
-10
Mar
-11
De
c-1
1
Sep
-12
Jun
-13
Mar
-14
De
c-1
4
Sep
-15
Jun
-16
Mar
-17
Portugal Spain Italy
-86,5
-13,5
-122,1
Portugal
-103,9
-140
-120
-100
-80
-60
-40
-20
0
Mar
-01
Mar
-02
Mar
-03
Mar
-04
Mar
-05
Mar
-06
Mar
-07
Mar
-08
Mar
-09
Mar
-10
Mar
-11
Mar
-12
Mar
-13
Mar
-14
Mar
-15
Mar
-16
Mar
-17
Spain Italy Portugal
Outline
15
1.1. 3.
1. Economic revitalization
2. External rebalancing
3. Private sector turnaround
4. Fiscal stabilization
5. Resilient public debt structure
3. Private sector turnaround
Private sector turnaround, resulting from improved profitability and balancesheet strengthening
16
[Net lending (+)/ Net borrowing (-) in % of GDP]
Consistent net lending positions…
[Private sector debt/GDP]
… leading to private sector deleveraging
Portugal
215,1%
201,1%
165%
180%
195%
210%
225%
240%
255%
270%
Portugal Euro area
Source: Statistics Portugal Source: ECB
-54.6pp
Lowest since 2005Q1
-12
-10
-8
-6
-4
-2
0
2
4
6
Non financialcorporations
Financial corporations Households
2008 2009
2010 2011
2012 2013
2014 2015
2016 2017Q1
2017Q2
Households net financial position improving
Net worth is now above pre-crisis levels … … driven by deleveraging
[EUR billion]
Source: Banco de Portugal Source: ECB
17
3. Private sector turnaround
[Debt/GDP; Non-consolidated; Nominal values]
-184-160
551 568
-250
-100
50
200
350
500
650
800
Total financial assets Total non-financial assets
Total liabilities Total net worth
84,4%
101,8%
90,6%94,2%
Portugal
102,6%
61,2%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
Germany Spain France
Euro Area Portugal Italy
Strengthening of corporates’ capital structure ...
Strong decline of debt stock
[Debt/GDP; Non-consolidated]
Source: ECB Source: Banco de Portugal
18
3. Private sector turnaround
Improved solvency position
[Capital ratio = Equity/Assets]
Portugal
112,4%
100,1%
133,6%
79,4%
106,9%
62,0%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
Portugal Spain France
Italy Euro Area Germany
30%
31%
32%
33%
34%
35%
36%
… combined with improved profitability has paved the way for investment
… which bodes well for investment growth
[GVA and GFCF, YoY %]
Source: Banco de Portugal Source: Statistics Portugal
19
3. Private sector turnaround
NFC profitability levels are being restored …
[NI/Equity and EBITDA/Assets]
-20%
-15%
-10%
-5%
0%
5%
10%
15%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
Gross value added (YoY %, LHS)
Gross fixed capital formation (YoY %, RHS)
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Return on equity EBITDA/Assets
Banks dealing with legacy assets
NPL ratio is receding… … and overdue credit is declining sharply
[% of gross credit; at end of period] [YoY %]
Source: Banco de Portugal Source: Banco de Portugal
20
3. Private sector turnaround
Source: Banco de Portugal
-25%
-15%
-5%
5%
15%
25%
35%
45%
55%
65%
Jan
-06
Jul-
06
Jan
-07
Jul-
07
Jan
-08
Jul-
08
Jan
-09
Jul-
09
Jan
-10
Jul-
10
Jan
-11
Jul-
11
Jan
-12
Jul-
12
Jan
-13
Jul-
13
Jan
-14
Jul-
14
Jan
-15
Jul-
15
Jan
-16
Jul-
16
Jan
-17
Jul-
17
7.2
%
7.4
%
7.2
%
7.1
%
7.0
%
6.7
%
6,5
%
12
.5%
12
.4%
11
.3%
11
.3%
10
.7%
10
.0%
9,6
%
28
.6%
29
.6%
30
.3%
30
.1%
29
.4%
29
.0%
27
,5%
17.5% 17.9% 17.9% 17.6% 17.2% 16.7%15,5%
2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2
NPLs - Housing NPLs - Consumption
NPLs - Non-financial corporations NPLs - Total
21
3. Private sector turnaround
A three pillar strategy is being followed by the Authorities to deal with NPLs
Legal and judicial reform
NPL managementPrudential supervisory action
Legislative changes tofacilitate the restructuring of
economically viable firms and the expedite insolvency
and liquidationprocedures of non-viable
ones, capable of reimbursing creditors sooner and maximizing the value recovered by banks.
Shall play a key role in this process, within the SSM
context, through the monitoring of granular
information of NPL exposures, submission of NPL reduction plans by
banks, as well as measures to encourage the reduction
and to prevent the emergence of new streams
of NPLs.
Creation of a system-wide platform to coordinate
NPLs management between banks, backed by a
framework for corporate debt restructuring and
injection of capital / debt financing. Additionally,
setting up an AMC favorable environment may facilitate
the sale of NPLs, while attracting private sector
investment and benefiting from the integrated
management of these assets.
Banking sector challenges being addressed
22
• The 2nd stage of CGD’s recapitalization was concluded in Mar-17, with issuance of€0.5 bn of subordinated bonds and State capital injection of €2.5 bn
• The State capital injection may have an impact on the 2017 deficit figures (still to bedetermined), but it has no additional impact on public debt
CGD
3. Private sector turnaround
• NB redeemed all its State-guaranteed debt between Nov-16 and Feb-17 (€3.5bn)
• NB bought back of senior bonds maturing between 2019 and 2052, ensuring acapital increase of €500mn
• A 75% stake in NB was sold to Lone Star, resulting in an immediate capital injectionof €750 mn (and an additional €250 mn by the end of 2017). The Resolution Fundwill retain 25% of the capital.
Novo Banco
BCP
• Capital increase of €1.33 bn finalized in Feb-2017, which allowed the reimbursementof the remaining €700 mn of CoCos
• Following the capital increase, Fosun share reached 23.5%
BPI• The removal of the voting rights limit opened the door for a successful public offer by
CaixaBank, finalized in Feb-2017, which increased its share to over 84.5%
3. Private sector turnaround
De-risking of the banks capital structure
23
[Loans to Deposits Ratio, %]
More stable funding structure
[Core tier 1 | Common Equity tier 1, %]
Higher capital levels in a challenging context
Source: Banco de Portugal
13,3 12,3 13,3 12,3
Solvency Ratio
12,69,810,3
Source: Banco de Portugal
150,8
135,1
122,6
111,8
102,1
96,1 95,593,5
2010 2011 2012 2013 2014 2015 2016 2017Q2
7,4
8,7
11,5
12,3
11,3
12,4
11,4
13,2
2010 2011 2012 2013 2014 2015 2016 2017Q2
(*) Since Jan-2014 is in effect a new, transitory, regime of own funds adequacy, which takes into account Basel III phase-in arrangements.
14,4
Helping improve credit allocation
Redirection towards tradable sectors … … supporting exports growth
[Loans to NFC, annual rate of change, % ] [Exports % of GDP and Loans to exporting firms % of loans to NFC]
Source: Banco de Portugal
24
3. Private sector turnaround
Source: Banco de Portugal/Statistics Portugal
-20
-15
-10
-5
0
5
10
15
20
25
30
Jan
-08
Jul-
08
Jan
-09
Jul-
09
Jan
-10
Jul-
10
Jan
-11
Jul-
11
Jan
-12
Jul-
12
Jan
-13
Jul-
13
Jan
-14
Jul-
14
Jan
-15
Jul-
15
Jan
-16
Jul-
16
Jan
-17
Jul-
17
Real Estate Construction Trade
Manufacturing Total
14%
15%
16%
17%
18%
19%
20%
21%
22%
23%
24%
29%
31%
33%
35%
37%
39%
41%
43%
45%
47%
49%
De
c-0
9
Jun
-10
De
c-1
0
Jun
-11
De
c-1
1
Jun
-12
De
c-1
2
Jun
-13
De
c-1
3
Jun
-14
De
c-1
4
Jun
-15
De
c-1
5
Jun
-16
De
c-1
6
Jun
-17
Exports in % of GDP (LHS)
Loans to exporting firms (% of total loans to NFC) (RHS)
Outline
25
1. 4.
1. Economic revitalization
2. External rebalancing
3. Private sector turnaround
4. Fiscal stabilization
5. Resilient public debt structure
EC
projectionsEC
projections
4. Fiscal stabilization
Fiscal discipline has succeeded in stabilizing debt levels, throughout economicand political cycles
26
[% of GDP]
Strong primary surplus …
[EDP gross debt, % of GDP]
… supporting public debt stabilization
Source: European Commission Source: European Commission
2,5 Portugal
-10
-8
-6
-4
-2
0
2
4
6
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018f
Euro area Spain Italy Portugal
126,4Portugal
30
40
50
60
70
80
90
100
110
120
130
140
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018f
Euro area Spain Italy Portugal
38%
40%
42%
44%
46%
48%
50%
52%
-12%
-10%
-8%
-6%
-4%
-2%
0%
Total revenue Total expenditure Overall balance
4. Fiscal stabilization
Source: Statistics Portugal and Ministry of Finance Source: Statistics Portugal and Ministry of Finance
27
The overall deficit reached 2.0% of GDP in 2016 (the first time below 3% since enteringthe euro area and the lowest since 1974) and is expected to decline to 1.0% in 2018
Structural adjustment
[% GDP][Total revenue, total spending and overall balance; % GDP]
Significant reduction of expenditure
MF
projections
-11,2
-9,0
-7,4
-6,1-5,7
-3,4
-4,8
-2,9
-7,2
-1,7
-4,4
-2,3-2,0 -2,0
-1,4-1,8
-1,0-1,3
Overall balance Structural overall balance
2010 2011 2012 2013 2014 2015 2016 2017p 2018p
Fiscal consolidation was achieved through a strong improvement of the primary surplus(reaching a surplus of more than 2.0% of GDP since 2016) and is also supported bydeclining interest costs
General Government Accounts
[% GDP]
Source: Statistics Portugal and Ministry of Finance
28
4. Fiscal stabilization
General Government Account (accrual basis)
(% GDP) 2010 2011 2012 2013 2014 2015 2016 P 2017 E 2018 P 2018 vs 2017
Total revenue 40.6% 42.6% 42.9% 45.1% 44.6% 43.8% 43.0% 43.4% 43.5% 0.1pp
Current revenue 39.4% 41.5% 41.1% 44.0% 43.6% 43.0% 42.6% 42.7% 42.8% 0.1pp
Current taxes on income and wealth 8.5% 9.5% 9.0% 11.4% 11.0% 10.9% 10.3% 10.2% 9.8% -0.4pp
Taxes on production and imports 13.2% 13.9% 13.9% 13.7% 14.2% 14.5% 14.8% 15.0% 15.1% 0.1pp
Social contributions 11.9% 12.0% 11.4% 12.0% 11.8% 11.6% 11.7% 11.7% 11.7% 0.0pp
Other revenue 5.8% 6.2% 6.9% 6.8% 6.6% 6.1% 5.9% 5.8% 6.2% 0.4pp
Capital revenue 1.3% 1.1% 1.8% 1.1% 1.0% 0.8% 0.4% 0.7% 0.7% 0.0pp
Total expenditure 51.8% 50.0% 48.5% 49.9% 51.8% 48.2% 45.0% 44.8% 44.5% -0.3pp
Current expenditure 44.6% 45.6% 45.3% 46.8% 45.6% 43.9% 43.1% 42.5% 41.8% -0.7pp
Social benefits 18.6% 18.9% 19.6% 20.4% 19.7% 19.3% 19.0% 18.7% 18.6% -0.1pp
Compensation of employees 13.7% 12.8% 11.7% 12.5% 11.9% 11.3% 11.3% 11.1% 10.8% -0.4pp
Interest (EDP) 2.9% 4.3% 4.9% 4.9% 4.9% 4.6% 4.2% 3.9% 3.6% -0.4pp
Intermediate consumption 5.9% 6.0% 5.8% 5.6% 5.7% 5.6% 5.6% 5.6% 5.6% 0.0pp
Subsidies 0.7% 0.7% 0.6% 0.6% 0.7% 0.6% 0.5% 0.5% 0.5% 0.0pp
Other current expenditure 2.8% 2.9% 2.7% 2.7% 2.7% 2.6% 2.5% 2.5% 2.6% 0.1pp
Capital expenditure 7.2% 4.4% 3.3% 3.2% 6.2% 4.3% 1.9% 2.4% 2.8% 0.4pp
Gross fixed capital formation 5.3% 3.5% 2.3% 2.3% 1.9% 2.4% 1.5% 1.7% 2.3% 0.6pp
Other capital expenditure 1.9% 0.9% 1.0% 0.9% 4.2% 1.9% 0.4% 0.7% 0.5% -0.2pp
Overall balance -11.2% -7.4% -5.7% -4.8% -7.2% -4.4% -2.0% -1.4% -1.0% 0.4pp
Memo items
Primary expenditure 48.9% 45.7% 43.6% 45.1% 46.9% 43.6% 40.8% 40.9% 40.9% 0.1pp
Primary balance -8.2% -3.1% -0.8% 0.0% -2.3% 0.2% 2.2% 2.5% 2.6% 0.1pp
115,7118,4 120,4 121,4 120,8 119,1 117,3
10,510,6
10,2 7,4 9,3
7,26,1
126,2129,0
130,6128,8
130,1
126,2123,5
80
90
100
110
120
130
2012 2013 2014 2015 2016 2017 2018
CentralGov deposits
GenGov debt net of CentralGov deposits
GenGov gross debt
Assumptions for public debt dynamics
4. Fiscal stabilization
Public debt is projected to resume a gradual declining trend in 2017
Public debt downward trend …
[Maastricht debt, % GDP]
29
YEAR 2015 2016 2017 P 2018 P
Real growth rate (yoy%) 1.8 1.5 2.6 2.2
GDP deflator (yoy%) 2.0 1.4 1.3 1.4
Overall balance (%GDP) -4.4 -2.0 -1.4 -1.0
Primary balance (%GDP) 0.2 2.2 2.5 2.5
Interest costs (%GDP) 4.6 4.2 3.9 3.6
Implicit interest rate (%GGDebt t-1) 3.6 3.4 3.1 2.9
Source: Ministry of Finance
YEAR 2015 2016 2017 P 2018 P
Maastricht debt (% GDP) 128.8 130.1 126.2 123.5
Change (pp GDP) -1.8 1.4 -3.9 -2.8
Primary balance effect -0.2 -2.2 -2.5 -2.6
Snowball effect -0.3 0.5 -1.0 -0.8
Interest costs 4.6 4.2 3.9 3.6
Nominal GDP -4.9 -3.7 -4.9 -4.4
Other stock-flow adjustments -1.3 3.1 -0.4 0.6
Decomposition of public debt dynamics[pp GDP]
(*) State-guaranteed debt not considered in the Maastricht debt
currently amounts to about 4pp of GDP.
… is supported by strong primary surpluses and decreasing interest costs
Outline
30
1. 5.
1. Economic revitalization
2. External rebalancing
3. Private sector turnaround
4. Fiscal stabilization
5. Resilient public debt structure
5. Resilient public debt structure
A significant improvement in the debt structure is a key source of resilience
31
One of the longest average maturities …
[Years]
Source: IGCP
6,9
8,2 8,28,8
8,3
5,3 5,15,5
6,7 6,5
7,3
4,0
3,0
6,0
9,6
12,1
8,8
8,0
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
Average residual maturity
Average residual maturity excl EU-IMF loan
Average maturity of MLT debt issuance in each year
… with a declining implicit interest rate
[%]
Source: IGCP
4,5
5,8
4,24,4
3,7
2,7 2,8 2,8
3,5
4,13,9
3,6 3,63,4
3,2
2010 2011 2012 2013 2014 2015 2016 2017
Cost of issuance per year Cost of debt outstanding
Jan-Oct2017
€15bn of MLT debt issuance in capital markets in 2017 including 40% of 2018needs
State’s borrowing needs and sources 2016-2021
[EUR billion; as of 16 November, 2017]
Source: IGCP and Ministry of Finance
32
5. Resilient public debt structure
* State sub-sector cash deficit in 2016-18. Projection for GG deficit (excl SS) in 2019-21 (Stability Program, Apr 2017).
** Includes refinancing of other public entities (namely SOEs and regions), as well as the redemption of CoCos, the direct capitalization of CGD, and the credit line to the Single Resolution Board.
*** Includes centralization of funds of other public entities in the Single Treasury Account.
**** Excluding cash-collateral.
2016 2017 P 2018 P 2019 P 2020 P 2021 P
State borrowing requirements 22.5 26.7 18.8 16.0 13.4 20.4
Net financing needs 8.3 9.8 11.1 5.4 3.1 1.4 Overall deficit * 6.2 5.2 5.7 1.6 0.5 -1.5 Other net acquisitions of financial assets ** 2.1 4.6 5.3 3.8 2.5 2.8
MLT Redemptions 14.2 16.9 7.7 10.6 10.3 19.0 Tbonds (PGB + MTN) 9.7 7.8 6.7 9.7 10.3 13.7 FRN/OTRV 3.5 IMF (executed) 4.5 9.0 IMF (to be executed) 1.0 0.8 0.0 1.8
p.m. IMF (original maturity of outstanding loan) 0.0 0.0 0.0 0.0 3.7
State financing sources 22.5 26.7 18.8 16.0 13.4 20.4
Use of deposits -3.6 2.0 1.3 0.4 -3.5 6.0
Financing in the year 26.1 24.7 17.5 15.6 16.9 14.4Executed 26.1 22.6
Tbonds (PGB + MTN) 17.4 15.1 FRN/OTRV 3.5 2.2 Retail debt (net) 3.5 2.6 Tbills (net) 0.1 0.3 Other flows (net) *** 1.7 2.3
To be executed 2.1 17.5 15.6 16.9 14.4 Tbonds (PGB + MTN) 15.0 Retail debt (net) 0.6 1.8 Tbills (net) Other flows (net) *** 1.5 0.7
State Treasury cash position at year-end **** 10.2 8.2 6.9 6.5 10.0 4.0
21%; 5 51%; 4 100%; 422%
3%; 1
25%
41% 53%
22%
9%
35% 42%
8%
15%26%
10% 8%
38%
8%
25%
46%
46%
48%
45%
7%
17%
19% 8%
2%
24
8
4
12
20
23
22
17
2010 2011 2012 2013 2014 2015 2016 2017
<4[ [4-6[ [6-9[ [9-13[ >=13
Regular issuance of MLT debt through different channels and across the curve
Auctions regaining the main role in the annual funding plan Supporting liquidity in different points of the curve
[MLT debt issuance per method of issuance; EUR billion] [MLT debt issuance per bucket; EUR billion]
Source: IGCP Source: IGCP
33
5. Resilient public debt structure
12% 41%
45%
48%47%
25%
18%
77%; 19
47%; 4
20%; 4
36%; 8
45%; 10
59%; 10
100%; 4
55%; 7
9% 2
17%; 4
5%; 1
10%; 2
11%
12%
23%8%
16%
13%
24
8
4
12
20
23
22
17
2010 2011 2012 2013 2014 2015 2016 2017
Syndications Auctions Exchanges MTN Issuance OTRV
Jan-Oct2017
Jan-Oct2017
The diversification of investors ensures a stable base of debt holders (1/2)
Progressively regaining traditional investors
Source: IGCP
34
Distribution by Geography Distribution by Investor Type
5. Resilient public debt structure
[Distribution by geography and investor type of 10-year syndications from 2010 to 2017]
20102013
2017
Asia
France
Germany/Austria/Switzerland
Nordics
North America
Other
Other EU
Portugal
Spain
UK
2010
20132017
Asset Managers
Banks
Official Institutions
Hedge Funds
Insurance / Pension Funds
Others
[% of total State debt securities]
Source: IGCP Source: IGCP
35
5. Resilient public debt structure
More diversified public debt composition
[EUR billion and % of total State debt]
Non-domestic holdings in line with EU peers
25
35
45
55
65
75
85
De
c-0
9
Jun
-10
De
c-1
0
Jun
-11
De
c-1
1
Jun
-12
De
c-1
2
Jun
-13
De
c-1
3
Jun
-14
De
c-1
4
Jun
-15
De
c-1
5
Jun
-16
De
c-1
6
Portugal Spain Italy
The diversification of investors ensures a stable base of debt holders (2/2)
69%69%
70% 59%48% 45% 43%
46% 47% 48%
11%
13%
13% 7%9% 9% 7%
7%
6%7%
15%
13%
11%7%
6% 6% 8%
9%
10%11%
21%32%
35%36%
32%
30%25%
118
133
152
175
194204
217226
236242
0
40
80
120
160
200
240
Dec2008
Dec2009
Dec2010
Dec2011
Dec2012
Dec2013
Dec2014
Dec2015
Dec2016
Oct2017
PGB Other MLT
Tbills Other ST
Retail EU-IMF
Other non-tradable TOTAL
Since April 2016, ECB purchases of PGBs have been lower than what would beexecuted from applying the capital key
Source: ECB Source: ECB
36
PSPP purchases (cumulative diff vs capital key)ECB PGB purchases under PSPP
[EUR billion][EUR billion]
-1,5
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
PSPP actual purchases PSPP purchases with capital key difference
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17
EUR
bill
ion
France Germany
Italy Portugal
Spain Ireland
Slovenia Slovakia
5. Resilient public debt structure
37
Liability management operations have smoothed the redemption profile
[Redemption calendar MLT debt; Nov-17 + rollover EFSM; EUR billion]
Source: IGCP
Maturity profile spread over a long time span
5. Resilient public debt structure
(*) Exact final maturity date of each EFSM individual loan will be defined when the original loans are rolled over (IGCP
simulation in orange), but it is not expected that Portugal will have to refinance any of its EFSM loans before 2026.
IGCP is actively buying back off-the-run PGBs
76% of the IMF loan has been fully repaid
[PGB buybacks, Jan-Sep 2017]
[Repurchases of IMF loan]
SecurityOutright buyback
(EUR million)Exchange
(EUR million)
OT Oct 2017 361 -
OT Jun 2018 1,091 427
OT Jun 2019 101 401
OT Jun 2020 - 908
OT Oct 2022 - - 1,793
TOTAL 1,554 -
Date SDR million EUR million
2015 6,579 8,448
2016 3,560 4,496
2017 7,394 9,012
TOTAL 17,534 21,956
0
3
6
9
12
15
18
21
24
2017 2021 2025 2029 2033 2037 2041 2045
EFSF
EFSM
EFSM (final maturity to be confirmed)
IMF
Other medium- and long-term debt
Source: IGCP
Appendix
38
A. Macroeconomic indicators
B. Structural reforms
C. Fiscal indicators
D. Debt management indicators
Economic structure better adapted for sustainable recovery cycle, as exportsnow weigh 40% of GDP
GDP composition (current prices) GVA composition (current prices)
[% of GDP] [% of GVA]
Source: Statistics Portugal Source: Eurostat
39
A. Macroeconomic indicators
27 28 27 3038 40 41 40
65 63 6466
66 66 66 66
24 2924
2116 15 15 15
1819
21 21 19 19 18 18
-33-39 -36 -37 -38 -40 -40 -39
1995 2000 2005 2010 2012 2014 2015 2016
Imports
Generalgovernmentconsumption
Gross fixed capitalformation
Privateconsumption
Exports
5 4 3 2 2
1918
15 14 14
33
33 5
78
76 4
1919
1818 20
78
88
8
1413
15 1717
27 29 31 32 30
1995 2000 2005 2010 2016
Other services
Financial, insurance andreal estate
Transportation and storage;information andcommunication
Wholesale and retail trade,repair of motor vehicles;accommodation and foodserviceConstruction
Energy, water supply andsewerage
Industry
Agriculture, forestry andfishing
Upward trend in soft and hard data economic indicators
Coincident indicators and real GDP Retail sales and Industrial production
[yoy %] [3 month average, YoY%]
Source: Banco de Portugal, Statistics PortugalSource: Statistics Portugal
40
A. Macroeconomic indicators
-8
-6
-4
-2
0
2
4
Activity Coincident Indicator (3m MA)
Private Consumption Coincident Indicator (3m MA)
GDP (yoy %) -14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
Industrial Production
Retail Sales
In 2017, investment main objectives are extension of production capacity andreplacement, mainly directed to manufacturing
Investment objectives in 2017 Investment objectives by economic sector in 2017
[Investment distribution by objectives, % of total] [Investment distribution by NACE sections, %]
Source: Statistics Portugal Source: Statistics Portugal
41
38,2%
36,3%
12,0%13,4%
Extension ofproduction capacity
Replacement To stream line ofproduction
Other investmentobjectives
28,7%
13,8%12,8%
10,6%9,3%
7,6%
5,3%
2,9% 2,7% 2,6%1,8%
1,1% 0,9%
A. Macroeconomic indicators
Inflation in Portugal is in line with other European countries, despite someadditional volatility in recent figures
HICP Core HICP
[Year-on-year growth, %] [Year-on-year growth; %]
Source: Eurostat Source: Eurostat
42
A. Macroeconomic indicators
-3
-2
-1
0
1
2
3
4
5
Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17
Diff Euro area (19 countries) Portugal
-3
-2
-1
0
1
2
3
Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17
Diff Euro area (19 countries) Portugal
Currently most sectors are contributing positively to HICP inflation in Portugal,in particular restaurants and hotels, and transport and communication
Portugal Euro Area
[Contributions to yoy HICP growth, %]
Source: Eurostat Source: Eurostat43
A. Macroeconomic indicators
[Contributions to yoy HICP growth, %]
-1
0
1
2
3
4
Oct-11 Jul-12 Apr-13 Jan-14 Oct-14 Jul-15 Apr-16 Jan-17 Oct-17
OthersRestaurants and hotels Transport and communicationsHousing, water, electricity, gas and other fuels Food, beverages, tobacco and narcoticsHICP
-1
0
1
2
3
4
Oct-11 Jul-12 Apr-13 Jan-14 Oct-14 Jul-15 Apr-16 Jan-17 Oct-17
OthersRestaurants and hotelsTransport and communicationsHousing, water, electricity, gas and other fuelsFood, beverages, tobacco and narcoticsHICP
Well diversified exports distribution, with limited sectoral or geographicalconcentration
Portuguese goods exports by major destination and sector
[% total exports by destination and sector; YTD Jul 2017]
Source: Statistics Portugal
44
A. Macroeconomic indicators
Others WORLD
Elec. and Mec. Machinery 2.15 1.55 3.57 1.50 0.51 0.28 0.42 0.32 0.77 0.14 4.29 15.5
Vehicles and parts, Aircraft 2.98 2.06 2.07 1.10 0.21 0.14 0.35 0.17 0.06 0.48 1.83 11.4
Textile Products 3.31 1.27 0.87 0.80 0.53 0.37 0.45 0.19 0.09 0.07 1.85 9.8
Plastics and Rubber 2.34 0.93 0.99 0.39 0.29 0.47 0.27 0.23 0.20 0.05 1.58 7.7
Base Metals 2.72 1.27 0.56 0.54 0.36 0.19 0.09 0.15 0.28 0.06 1.65 7.9
Mineral products 1.88 0.28 0.05 0.13 1.20 0.62 0.29 0.28 0.05 0.19 3.47 8.4
Prep. Food, Beverages and
Tobaco1.67 0.82 0.20 0.38 0.22 0.18 0.27 0.15 0.33 0.15 1.31 5.7
Chemicals (incl. Pharma.) 1.13 0.28 0.61 0.41 0.50 0.18 0.17 0.32 0.40 0.02 1.21 5.2
Pulp of Wood and Paper 1.09 0.46 0.44 0.20 0.20 0.33 0.25 0.06 0.10 0.20 1.22 4.6
Footware 0.37 0.85 0.73 0.22 0.14 0.55 0.11 0.10 0.04 0.02 0.78 3.9
Others 5.74 3.00 1.22 1.03 1.06 0.70 0.96 0.45 0.90 0.15 4.63 19.8
TOTAL 25.4 12.8 11.3 6.7 5.2 4.0 3.6 2.4 3.2 1.5 23.8 100
Exports growth based on geographical and sectoral contributors
Major sector and country contributions
[%, YTD Jul 2017]
Source: Statistics Portugal
45
A. Macroeconomic indicators
Textile Products 0.06 0.08 -0.01 0.04 0.07 0.01 0.00 0.04 0.16 0.45 4
Plastics and Rubber 0.23 0.07 0.03 0.09 0.07 -0.02 0.00 0.09 0.27 0.82 11
Manufactured Products 0.03 0.11 0.04 -0.07 0.03 0.01 -0.01 0.07 0.09 0.31 8
Vegetable Products 0.13 0.05 0.00 0.05 0.00 0.00 0.00 0.05 0.17 0.45 22
Footware -0.01 -0.01 -0.01 0.06 0.00 -0.01 0.00 0.02 0.13 0.18 4
Optical / medical / precision
instr.0.01 -0.02 0.03 0.18 0.10 0.01 0.00 0.02 0.17 0.49 30
Animal Products 0.16 0.00 0.01 0.00 0.01 0.01 0.00 0.05 0.32 0.55 21
Vehicles and parts, Aircraft 0.21 0.30 -0.04 -0.37 0.12 0.29 0.00 0.00 0.20 0.72 6
Prep. Food, Beverages and
Tobaco-0.06 0.00 -0.05 0.02 0.03 0.05 0.00 0.09 0.21 0.29 5
Base Metals 0.57 0.16 0.11 0.05 0.21 0.02 -0.25 0.13 0.24 1.24 17
Mineral products 0.37 -0.02 0.12 0.01 0.32 -0.03 -0.12 0.01 1.83 2.50 36
Others 0.14 0.32 -0.04 0.40 0.10 0.09 -0.10 0.60 1.64 3.13
TOTAL 1.85 1.05 0.17 0.46 1.04 0.43 -0.47 1.17 5.44
YoY 7 8 2 4 22 34 -47 4811.14
Others WORLD YoY
Services exports are benefiting from a strong performance of the tourism sector
Decomposition of services exports Nights spent in hotel establishments
[Contributions to yoy Services exports growth, %] [yoy %]
Source: Banco de Portugal Source: Statistics Portugal
46
5,8 5,8
-1,3
-7,1
2,6
5,5
0,6
4,8
10,4
6,5
9,6
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
Residents Non Residents Total
2,7
19,8
15,7
4,6
-8,5
6,5
12,1
4,0
10,2
5,9
7,5
4,4
-10
-5
0
5
10
15
20
Transportation Tourism Other Services
A. Macroeconomic indicators
Appendix
47
A. Macroeconomic indicators
B. Structural reforms
C. Fiscal indicators
D. Debt management indicators
B. Structural reforms
Labor market reforms
48
(1) Unemployment benefit has been extended to certain self employed categories (+80% of wage needs to come from one employer )
Unemployment Benefits
Capped at:
26 months (38 months before)
2.5x IAS (3xIAS before) with 10% reduction after 6 months
Min. contribution period 12 months (15 before)
Extension to self employed (1)
Reduce risk of long term unemployment
Encourage earlier return to labor market
Reduce contribution period that gives access unemployment
insurance
Severance Payment
12 days/year for new contracts;
18 days/year (old contracts first 3 years)
(30/36 days before)
Cap: 12 months
Improve efficiency and eliminate labor market duality
Working time Arrangements
Introduction of individual bank of hours, capped at 150 hours (vs. 200
before);
Collective bank of hours
Vacations up to 22 (vs 25 days )
Increase flexibility in production cycle;
Improve productivity;
Improve production capacity adjustment to peak periods
without increasing personnel costs
B. Structural reforms
Hiring and firing is now easier and less costly
Source: World Economic Forum Source: World Economic Forum
49
1
2
3
4
5
ITA FRA ESP PRT DEU GRC IRL
2015 2008
0
10
20
30
40
50
60
70
80
90
100
ITA FRA IRL GRC PRT ESP DEU
2015 2008
Hiring and firing practices
[Index scale from 1 to7 (best)]
Redundancy costs[Cost of advance notice requirements, severance payments, and penalties due when terminating a redundant worker, expressed in weekly wages]
Judicial system reforms
50
Effectiveness of labor, civil, commercial and tax courts
Streamline and speed up court proceedings;
Reduce and expedite the resolution of backlog cases;
Improve enforcement procedures.
Restructuring of the court system with the adoption of new court management models (New Judicial Map);
New Code of Civil Procedure;
Creation of specialized courts (new Competition Court and Intellectual Property Court);
Alternative dispute resolution
Create and strengthen alternative dispute resolution means to facilitate out-of-court mechanisms.
New Tax Arbitration Law;
Strengthened Peaces of Justice regime;
Out-of-court debt restructuring framework (SIREVE).
B. Structural reforms
Since 2012, significant improvements were made both in the clearance rate andin the disposition time
Source: DGPJ Source: DGPJ
51
Clearance Rate
[Clearance Rate (%) = Resolved cases/ Incoming cases × 100]
Disposition Time (days)
Disposition Time = Pending cases/Resolved cases × 365]
B. Structural reforms
97%
124%
70%
80%
90%
100%
110%
120%
130%
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
849
710
400
500
600
700
800
900
1000
1100
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
B. Structural reforms
Public Administration reforms
Portugal was one of the first EA countries to translate the “Fiscal Compact” rules to its legal framework
52
New Budgetary Framework Law:
• Fiscal compact rules introduced in 2013 and new Law approved in 2015 (both approved by a qualified majority in Parliament);
• Introduction of a program-based budgeting.
New Commitments’ Control Law:
• Ability of public entities in assuming commitments is constrained to the quarterly available funds;
• Establish strong incentives for suppliers to closely watch infringements.
New Public Finance Council:
• Contribute to bring transparency and accountability on fiscal policy;
• Review government revenue projections and multi-annual fiscal plans.
Restructuring State Owned Enterprises:
• Commercial SOEs reached operational balance in 2012, through downsizing, cuts in operational costs, and investment restrictions;
• Most subsidiaries and shareholdings in non-core activities will be eliminated by 2014;
• New governance model (Ministry of Finance has stronger power) and tighter reporting framework.
The number of civil servants declined by about 9% since Dec-11, putting a lid oncurrent expenditure
Number of civil servants[thousands]
Source: DGAEP
53
B. Structural reforms
164 158 154 149 147 147 148 149 149
13 12 12 11 10 10 10 10 10
551 530 510 497502
507 511 509 502
728700
675 656 659 664 670 668 661
Regional and Local Government Social Security Fund Central Government General Government
Social security reforms
54
• Introduction of new rules for the calculation of the pensions, considering the entire career and a
sustainability factor (the “life expectancy coefficient”);
• Further reduction of the benefits in relation to earlier retirement.
2007: new Social Security Framework Law(Social Security Reform 2007 – Law no. 4 -2007)
• Transposition of Social Security reform measures to CGA from 2008 on, with a transitory period until
2015.
2007: Convergence between CGA and GSSS(Law no. 52/2007 of 31 August)
• 2014: Normal retirement age increased from 65 to 66 years old (sustainability factor update);
• Following years: normal age of entitlement to old-age pension indexed to the average life
expectancy (updated in a 2/3 proportion of the change of the average life expectancy observed
between the 2nd and 3rd years preceding the pension entitlement ).
2014: new rules were introduced(Decret-Law no. 167-E/2013 and ministerial directive no. 378-G/2013 of 31 December)
B. Structural reforms
Appendix
55
A. Macroeconomic indicators
B. Structural reforms
C. Fiscal indicators
D. Debt management indicators
The overall balance of the GG on a cash basis stood at EUR -569 million between Jan-Sep2017, EUR 2,290 million above the same period in 2016
General Government (GG) balance
[EUR million; yoy change]
56
C. Fiscal indicators
-397 -151
290
-314 -359 -264
1.1531.901
2.290
-581
625-19
-358
-1.931
-698
-3.075-3.763
-2.034
-569
-4.763
1.022
132
-649-1.617
-339
-2.811
-4.916
-3.934
-2.860 -4.182
-2.000
0
2.000
4.000
6.000
8.000
10.000
-10.000
-8.000
-6.000
-4.000
-2.000
0
2.000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Target
yoy change (RHS) 2017 2016
Jan-Sep 2017 budget execution (on cash basis)
General Government total revenue on cash basis General Government total expenditure on cash basis
[%, pp] [%, pp]
Source: Ministry of Finance
57Execution in Jan-Sep 2017 2017 Budget target
C. Fiscal indicators
4,1
1,6
1,4
0,2
0,6
0,2
3,9
0,5
0,7
- 0,1
2,0
0,9
Total revenues (yoy, %)
Direct taxes
Indirect taxes
SS contributions
Other current revenue
Capital revenue
Main contributions (p.p.)
0,1
0,0
- 1,0
0,3
0,4
0,3
4,4
0,2
0,7
0,1
1,8
1,7
Total expenditures (yoy, %)
Employees
Current transfers
Interest and other charges
Other current expenditure
Capital expenditures
Main contributions (p.p.)
Appendix
58
A. Macroeconomic indicators
B. Structural reforms
C. Fiscal indicators
D. Debt management indicators
D. Debt management indicators
Average implicit interest rate anchored in historically low level, given therelatively long average maturity
Average maturity around 8 yearsImplicit interest rate on State direct debt
[State direct debt after swaps; Aug-2017][%; Interest costs in t / Average debt stock at the end of t-1 and t]
Source: IGCP
Source: IGCP
59
EntityAmount
disbursed (EUR bn)
Estimated all in cost
Final average maturity from disbursement date (years)
EFSM 24.1 2.7% 19.5
EFSF 26.0 1.9% 20.8
IMF 26.3 4.2% 5.9
Total EU-IMF 76.5 2.5% 15.3
EU/IMF loans with average cost of around 2.5%[Estimates; Aug-2017]
Outstanding (EUR bn)
Current average residual maturity
(years)
Final average residual maturity
(years)
EU-IMF 61.8 11.3 13.0
Other debt 182.9 6.3 6.3
Total 244.7 7.6 8.0
2012 2013 2014 2015 2016
PGB 4,4% 4,6% 4,7% 4,4% 4,0%
Tbills 4,1% 2,4% 1,2% 0,2% 0,0%
Retail debt 3,1% 3,4% 3,5% 3,6% 3,3%
EU/IMF 3,1% 2,8% 3,0% 2,9% 2,8%
Total 3,9% 3,6% 3,6% 3,4% 3,2%
Over-the-counter and platforms average daily turnover improved since 2013
Average daily turnover on PGBs
[EUR million]
Source: IGCP, HRF reports by Primary Dealers
60
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
2.000
Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17
Over-the-counter OT Platforms OT OT 12M Moving Average
D. Debt management indicators
Web site: www.igcp.ptBloomberg pages: IGCPReuters pages: IGCP01
61
Disclaimer
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