january 2011january 2011 - igcp · state budget 2011, oct 2010 –for 2010 and 2011 data (a)...

January 2011January 2011January 2011

2

I. Economic Overview

II. Recent Developments in Public Finances

III. Economic Growth Drivers

IV. Public Debt Management

V. Wrap Up

Appendix

Page

3

13

20

33

42

44

Contents

3

I. Economic overview

4

Key Economic Indicators

In 2009, Portuguese

real GDP declined

2.6% (which compares

favourably to the

Eurozone real GDP

decline of 4.1%).

Growth turned

positive again in

2010, with the trade

balance showing

positive dynamics.

The budget deficit is

expected to decrease

significantly, leading

to a slowdown in

growth in 2011.

However, the trade

balance dynamics are

set to improve

further.

Source: Ministry of Finance and Public Administration

Steering Report on the Budgetary Policy, July 2010 - for 2009 data

State Budget 2011, Oct 2010 – for 2010 and 2011 data

(a) Average annual change

(Rates of change, %)

2009 2010e 2011F

Real GDP -2.6 1.3 0.2

Private Consumption -1.0 2.0 -0.5

Public Consumption 3.0 1.9 -8.8

Investment (GFCF) -11.9 -2.0 -2.7

Exports -11.8 8.6 7.3

Imports -10.8 6.7 -1.7

Budget Balance (% GDP) -9.3 -7.3 -4.6

Public Debt (% GDP) 76.1 82.1 86.6

Inflation (a) -0.8 1.3 2.2

Unemployment Rate 9.5 10.6 10.8

5

Economic Growth

Source: Eurostat, Statistics Portugal

The growth rate in

Portugal remains

positive and above

expectations.

Exports remain a key

driver for growth:

•Exports +14.8%

(November YTD)

•Exports to non EU +

16.6% (November

YTD)

Quarterly GDP growth (YoY)

-1.0

1.71.4 1.5

0.8

1.9 1.9

-2.0-3

-2

-2

-1

-1

0

1

1

2

2

3

Q4 09 Q1 10 Q2 10 Q3 10

(%)

Portugal

Eurozone

-35

-30

-25

-20

-15

-10

-5

0

Irela

nd

Gre

ece

Spain

Slova

kia

France

Portugal

Cyp

rus

Net

herla

ndsSlo

venia

Italy

Bel

gium

Aust

ria

Mal

taG

erm

any

Finla

ndLuxe

mbo

urg

% o

f G

DP

EU-16 = -6,3 %

6

Public Accounts

The debt burden is

in line with euro

area average…

…even if the

Portuguese deficit is

estimated to be

higher than the Euro

Area average in

2010.

General Government Balance - 2010

General Government Debt - 2010

Source: EC 2010 Autum Forecasts

0

20

40

60

80

100

120

140

160

Gre

ece

Italy

Bel

gium

Irela

ndFr

ance

Por

tug

alG

erm

any

Mal

taA

ustr

iaN

ether

land

s

Spain

Cyp

rus

Finl

and

Slo

vaki

aS

love

nia

Luxe

mbo

urg

% o

f G

DP EA16 = 84.2%

7

Deleveraging

The Portuguese

economy has net

liabilities amounting

to 104% of GDP (as

at Sep 2010).

However, the public

sector is commited

to stabilize its debt

levels and...

...as a result of the

global credit crunch,

there are signs of

deleveraging in the

private sector.

Source: Statistics Portugal (quarterly data, one-year moving average)

International Investment Position (Sep 2010)

64%

40%

0%

20%

40%

60%

80%

100%

120%

Net Liabilities%

GD

P

Private

Public

Corporates

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Net lending / borrowing - %GDP (rhs)

Savings - %GDP (lhs)

Investment - %GDP (lhs)

Source: Portuguese Central Bank

Households

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%20

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Net lending / borrowing - %GDP (rhs)

Savings - %GDP (lhs)

Investment - %GDP (lhs)

8

Financial Sector

Portuguese banks

business is mainly

retail oriented.

The Portuguese

financial sector did

not suffer a

significant impact

from the subprime

crisis, as a result of

a limited exposure

to “toxic” assets and

the absence of a

real estate bubble.

Source: ECB, Eurostat

Credit from Banks (Q2 2010)

Others

39%

Corporates

28%

Households

33%


Residential Prices

158.4

126.2

90

100

110

120

130

140

150

160

170

2010

Q3

2009

Q3

2008

Q3

2007

Q3

2006

Q3

2005

Q3

2004

Q3

2003

Q3

2002

Q3

2001

Q3

2000

Q3

Euro area residential prices Portugal residential prices

Index 2000Q1 = 100

9

Financial Sector


Most of the loans

outstanding are for

housing, which have

the lowest non-

performing ratios

and did not increase

substantially during

this crisis.

Household Loans as % of disposable income

Non-performing loans

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Dec

-97

Dec

-99

Dec

-01

Dec

-03

Dec

-05

Dec

-07

Dec

-09

Housing: Non-performing loans / Total Housing loans

Consumption: Non-performing loans / Total Consumption loans

Non-Financial Corp: Non-performing loans / Total Non-Financial Loans

10

Financial Sector

Portuguese banks’

borrowing from the

ECB is already

showing a downward

path.

The largest

Portuguese banks

get on average 60%

of their funding

from retail clients.

Over 100% on

average of their

wholesale debt

repayment needs in

the next three years

are covered by

eligible assets.

Source: ES Research, National Central Banks, Bloomberg

Borrowing from the ECB

0

20

40

60

80

100

120

140

160

Jan. 2007 Jan. 2008 Jan. 2009 Jan. 2010

EU

R b

ln

Portugal

(40.9; December)

Spain

(61.1; November)

Greece

(96.4; November)

Ireland

(136.4; November)

85.7

40.6

24.0

8.5 5.8 5.0 2.2 2.1 1.7

0

10

20

30

40

50

60

70

80

90

Ireland Greece Portugal Netherlands Spain Germany France Italy Belgium

%

Central Bank Liquidity Provision (% GDP)

� The 2011 budget that supports new measures of deficit reduction was

approved by the parliament.

Composition of Parliament and Parliamentary Groups(Number of MPs by political party and % of total votes, according to the Sep. 2009 General Election)

djk

jh

kkfg

j

ghsg

dff

97 Members

(36.56%)

81 Members

(29.11%)

21 Members(10.43%)BE: 21 Members (9.81%)

13 Members

2 Members

7.86%*

* Votes were in coalition

11

Political & Social Environment

Political

environment: Clear

majority of market

friendly parties.

Number of workdays lost due to strikes*

(per 1000 employees)

Source: ES Research, Pordata

* 2000-2007 averages, except Greece (1991-2000 average)

Political & Social Environment

Above average social

cohesion facilitates

introduction of

austerity measures.

12

0

50

100

150

200

250

300

350

Germ

any

Neth

erlands

Port

ug

al

Sw

eden

UK

Irela

nd

US

Denm

ark

Italy

Austr

ia

Fra

nce

Belg

ium

Spain

Fin

land

Gre

ece

13

II. Recent developments in Public Finances

14

Budget Deficit

Source: Steering Report on the Budgetary Policy, July 2010

There is a strong

political consensus

between the two

main parties on the

need for

consolidation of

public accounts, and

Portugal has already

showed signs of the

strength of its

commitment in the

past.

The previous

consolidation

process was

complemented with

a social security

reform that will

improve the

sustainability of the

public accounts in

the long run.

% o

f G

DP

� The Portuguese PM stated, on Jan 11th, that the preliminary

numbers available show that the Portuguese government will

not only meet its budget target of 7.3% in 2010, but it will

come clearly below that figure

15

Main Measures for the State Budget for 2011 and for

the strengthening of budget execution for 2010

The budget for 2011

includes severe

austerity measures.

� Expenditure cuts – impact of 2.7% of GDP

� 5% overall average reduction on public sector salaries;

� Freeze pensions;

� Reduce travel allowances, overtime expenditure, and elimination

of accumulation of public salaries with pensions granted by the

public pension system;

� Reduce expenditure with National Health Service (NHS);

� 20% reduction on expenditure with Social Integration Subsidies;

� Reduce public investment on central administration programmes;

� 20% reduction on expenditure with central administration

vehicles;

� Extinction/merger of bodies of the public administration;

� Reorganisation and rationalisation of the public companies

16

Main Measures for the State Budget for 2011 and for

the strengthening of budget execution for 2010

Deficit to GDP targets

of 7.3% in 2010 and

4.6% in 2011 were

reaffirmed.

� Reduction of fiscal expenditure – impact of 0.4% of GDP

� Reduction of tax allowances and benefits on Personal Income Tax

� Review of fiscal benefits on Corporate Income Tax

� Convergence of tax rates for workers and pension beneficiaries

� Increase of fiscal revenue – impact of 0.6% of GDP

� 2 p.p. increase on the standard VAT rate (21% to 23%)

� Levy to the financial system, in line with the ongoing EU initiative

� Increase of contributory revenue – impact of 0.2% of GDP

� 1 p.p. increase of the contribution to the civil servants social

security scheme

� Implementation of the Contributory Code

� Non tax revenue – impact of 0.2% of GDP

Privatizations of the State-Owned Enterprises, 2010-2013

Privatization Plan

Between

2010 and 2013 the

revenue from

privatization is

expected to amount

to €6,000 million,

which will contribute

to reduce the General

Government debt...

Debt implicit interest rate in 2010e

3.53.4

0

1

2

3

4

5

Mal

ta

Gre

ece

Aust

ria

Ital

y

Slove

nia

Cyp

rus

Bel

gium

Port

uga

l

Euro

are

a (1

6 c

ountr

ies)

Slova

kia

Net

her

lands

Ger

man

y

Irel

and

Fran

ce

Spai

n

Finla

nd

Luxe

mbourg

Inte

rest

/ D

ebt (%

)

18

Funding Costs

The Portuguese debt

implicit interest rate

in 2010 is expected

to be in line with

the Euro area

average.

Source: European Commission, 2010 Autumn Forecasts

� In a simulation assuming a very extreme scenario of very high funding

costs going forward – 4% on the rollover of the entire T-bill programme

and 7% on all bond issuance - Portugal would still have an implicit

funding cost below 5% by 2013. This evidences that the country’s public

finances are quite resilient to the current excessive risk premium on

Portuguese debt.

19

Government Debt

According to the EC

2009 Sustainability

Report, Portugal has

a more sustainable

debt path than the

euro area average

(due to public

pension system

reform)…

… and the expected

increase in age-

related expenditures

in Portugal is now

one of the smallest

in the EU27.

Source: European Commission, 2009 Sustainability Report

EU27 projected government debt ratio in 2060

(% of GDP)

Increase in age-related expenditure, 2010-2060

(% of GDP)

20

III. Economic Growth Drivers

Portuguese Exports (quarterly data)

27.0

28.0

29.0

30.0

31.0

32.0

33.0

34.0

Q1

09

Q2

09

Q3

09

Q4

09

Q1

10

Q2

10

Q3

10

% G

DP

21

International Trade

Portuguese exports

fell in 2009, in line

with international

trade but have

already started to

recover, and this

trend is expected to

continue in the

coming years.

Portuguese Exports

20.0

22.0

24.0

26.0

28.0

30.0

32.0

34.0

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10e

20

11f

20

12f

20

13f

% G

DP

Source: Statistics Portugal, Ministry of Finance and Public Administration

22

Source: Statistics Portugal

Still relying on

traditional trading

partners, but

increasing exports to

a diversified number

of markets.

Over the last

decade, the share of

exports to non-Euro

zone countries

increased from 15%

to 27%.

Exports to Spain,

Portugal’s main

trading partner,

grew 14.4% (YoY) in

Jan-Sep 2010.

International Trade

Main Exports of Goods by destination (Jan-Sep 2010)

26.5%

12.6% 11.8%

5.4% 4.9% 3.8% 3.7% 3.6% 3.0%1.1% 1.1% 1.0%0%

5%

10%

15%

20%

25%

Spain

Ger

man

y

Fran

ceU

nite

d Kin

gdom

Ang

olaN

ether

land

sU

nite

d Sta

tes

Italy

Bel

gium

Bra

zil

Mex

ico

Swed

enMain Exports of Goods by type (Jan-Sep 2010)

15%

12%10%

9% 8%7% 6%

5% 4% 4% 4%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Mac

hiner

y, Equi

pmen

t

Vehic

les,

Tra

nspor

t equip

men

tTex

tile

Product

s

Min

erals

Bas

e M

etals

Plast

ics,

Rub

ber p

roduct

sPre

pare

d Foo

d

Chem

ical

s

Pulp, P

aper

Footw

ear,

Oth

ers

Stone,

Gla

ss

Source: INE, Eurostat,ES Research. *Goods.

International Trade

Weight on total Portuguese exports (%)*

The expansion in the

relevant market of

the Portuguese

economy should

provide an

important scale

effect, supporting

exports growth.

23

0.0

0.5

1.0

1.5

2.0

2.5

0

2

4

6

8

10

12

2002 2003 2004 2005 2006 2007 2008 2009

AFRICA (LHS)

ASIA (LHS)

LATIN AMERICA (RHS)

24

International Trade

Higher value added

and higher

technological

content of exports

evidence a positive

evolution of the

exports profile.

Source: Statistics Portugal, Ministry of Finance and Public Administration

*data until April 2010

Technological intensity of Portuguese exports

(% of total)

25

International Trade

The deficit of the

trade balance in the

3rd quarter of 2010

was the lowest of

the last 15 years

Source: Statistics Portugal

Trade Balance

(% of GDP) - current prices

-5.9

%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2000

Q1

2001

Q1

2002

Q1

2003

Q1

2004

Q1

2005

Q1

2006

Q1

2007

Q1

2008

Q1

2009

Q1

2010

Q1

Estimates of PSI-20 enterprise value outside Portugal(% of total)

Source: ES Equity Research estimate.

Portuguese

companies’

internationalization

is well diversified,

geographically…

…and almost half of

the value of the top

20 listed companies

in Euronext Lisbon

comes from their

international

businesses.

26

Internationalization of Portuguese Companies

Altri 97%

Portucel 95%

Sonae Indústria 90%

EDP Renováveis 84%

Semapa 80%

Jerónimo Martins 77%

Cimpor 72%

Galp Energia 60%

EDP 45%

BES 35%

BCP 32%

Portugal Telecom 30%

BPI 30%

Mota-Engil 30%

Sonae 8%

Zon Multimedia 2%

REN 0%

Brisa 0%

Sonaecom 0%

Total 48%

Source: Bank of Portugal statistical bulletin for March 2010; EUR million; (a) gross investment

Source: AMECO, ES Research

Recent divergence in

productivity vs.

Europe is the main

current challenge of

the Portuguese

economy.

Portugal’s long term

convergence trend

should resume

through new

structural changes

leading to higher

productivity growth

and competitiveness:

lower energy

dependency, higher

investment in R&D,

higher flexibility in

labor market, etc.

Labor Productivity (% Euro Area Average, PPP)

35

40

45

50

55

60

65

70

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Euro

Zone =

100

Structural Reforms

27

Source: AMECO, ES Research.

Electricity generated from renewable sources (as % of gross electricity consumption)

0

10

20

30

40

50

2005 2007 2010* - forecast

Sh

are

(%

)

EU (27 countries) Portugal

Structural ReformsThe trade deficit

problem is largely

related to the

country’s energy

dependence.

This is being

addressed by the

increased use of

renewable energy

sources.

In 2009, Portugal

registered the

second largest

weight of wind

generated

electricity in

consumption.

Source: Portuguese Central Bank, Statistics Portugal, Eurostat

Energy dependence

-12

-10

-8

-6

-4

-2

0

2005 2006 2007 2008 2009

(% o

f G

DP

)

Goods and services balance (excluding energy)

Energy

Trade balance

28

29

Structural Reforms

� Reduction of the country’s energy dependence to 74%, from the current

83%

� 60% of electricity production and 31% of total energy consumption

generated from renewable sources

� 20% reduction in the overall energy consumption

� 25% reduction on energy imports

� Promotion of a renewable energy cluster in the Portuguese economy.

The weight of the sector is to increase from 0.8% to 1.7% of GDP

Main goals of the

National Energy

Strategy 2020

30

Investment in R&D is

growing, leading to

more innovation and

new products. Half

of this investment

comes from the

private sector.

Data for 2009

(Portuguese Ministry

of Science,

Technology and

Higher Education)

show an increase to

1.7% of GDP. 2009

data for the

Eurozone is still not

available.

Structural Reforms

Source: Eurostat

Portugal: Gross domestic expenditure on R&D (% of GDP)

Euro Area Portugal

31

Education and

labour reforms are

already showing

results, promoting

competitiveness

gains.

Source: OECD

Source: Statistics Portugal, Ministry of Finance

and Public Administration

Structural ReformsQualification of the Labor Force: University degree and uneducated

(% of total)

Labor market rigidity

32

Some of the

structural reforms

are already showing

results.

Portugal currently

ranks 24th in the

Forbes “Best

Countries for

Business” (out of

128 countries)...

...and ranks 31th in

the ”Ease of doing

Business” (out of

183 countries) -

Doing Business 2011

Some of the criteria

have improved

significantly in the

last years.

Structural Reforms

Starting a Business

0

20

40

60

80

100

120

Spain

Pola

nd

Aust

ria

Gre

ece

Germ

any

UK

Ita

ly

Est

onia

Fra

nce

US

A

Port

uga

l

Hu

ngary

Belg

ium

Da

ys

2004 2008

Source: Doing Business

Source: Forbes (all economic data from 2009)

33

IV. Public Debt Management

� Market driven borrowing strategy

� Primary dealership system, as most countries in the EU

� Privileging the increase of liquidity on the curve

� Preserving the main pillars of transparency and accountability

� Combining predictability with flexibility under challenging market

conditions

�Active debt management

� IR swaps to adjust to benchmark duration

� Buy-backs to reduce refinancing risk

�Diversification of Financing Sources and Markets

Issuance Strategy

Guidelines

Guidelines on

issuance strategy

are clear and stable

over time, even

under particularly

challenging market

conditions.

34

Source: IGCP

In 2010, the regular

issuing programs

(PGB and T-bills)

have been met with

consistent demand,

even if at higher

yields, particularly

since May.

*In the PGB 2020 yield change, the OT2019 yield on Dec 30th was used as a reference.

2010 Funding Execution

35

BT auction results - Amounts

0500

10001500200025003000350040004500

6-0

1-1

0

3-0

2-1

0

3-0

3-1

0

17

-03

-10

21

-04

-10

5-0

5-1

0

2-0

6-1

0

7-0

7-1

0

4-0

8-1

0

18

-08

-10

1-0

9-1

0

15

-09

-10

6-1

0-1

0

3-1

1-1

0

17

-11

-10

15

-12

-10

EU

R m

ln

Indicative amount Competitive Allotment Demand

BT auction results - Spread vs Euribor

0

200

400

600

800

1000

1200

1400

06

-01

-10

03

-02

-10

03

-03

-10

17

-03

-10

21

-04

-10

05

-05

-10

02

-06

-10

07

-07

-10

04

-08

-10

18

-08

-10

01

-09

-10

15

-09

-10

06

-10

-10

03

-11

-10

17

-11

-10

15

-12

-10

EU

R m

ln-100

-50

0

50

100

150

200

250

300

350

400

b.p

.

Competitive Amount (lhs) Spread vs Euribor

OT auction results - Amounts

0

500

1000

1500

2000

2500

13-0

1-1

0

10-0

3-1

0

14-0

4-1

0

26-0

5-1

0

9-0

6-1

0

14-0

7-1

0

28-0

7-1

0

25-0

8-1

0

8-0

9-1

0

22-0

9-1

0

27-1

0-1

0

10-1

1-1

0

EU

R m

ln

Average Indicative Amount Competitive Allotment Demand

OT auction results - Yield Change

0

200

400

600

800

1000

1200

1400

13-0

1-1

0

10-0

3-1

0

14-0

4-1

0

26-0

5-1

0

9-0

6-1

0

14-0

7-1

0

28-0

7-1

0

25-0

8-1

0

8-0

9-1

0

22-0

9-1

0

27-1

0-1

0

10-1

1-1

0

EU

R m

ln

-50.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

b.p

.

Competitive Amount (lhs) Yield change vs 30-12-09 (rhs)

� Syndicated issuance of the new 10Y benchmark

� Inaugural syndicated issuance of the USD benchmark (MTN program)

Source: IGCP

Two syndicated

deals in 2010, both

well distributed

geographically and

by investor type.

Launch of USD

benchmark (MTN

programme)

increased the reach

to investors in Asia

and the US, and also

contributed to a

larger allocation to

Central Banks.

Investor type breakdown

OT2020

Central Bank /

Off icial Institution

11%

Other

1% Asset Manager

38%

Bank

26%

Insurance/

Pension Fund

24%

Geographical breakdown

OT2020

Other

3%

UK

15%

Scandinavia

9%

Spain

6%

France

24%

Portugal

17%Germany/Austria

15%

Benelux

3%Italy

3%Asia

5%

Geographical breakdown

MTN 5Y USD

Italy

5%

Other Europe

3%

Other

3%

US

16%Asia

19%

UK

32%Nordic

5%

France

8%

Portugal

9%

Investor type breakdown

MTN 5Y USD

Central Banks/

Off icial Institutions

18%

Fund Managers

30%

Banks

37%

Other

4%

Insurance/ Pension

Funds

11%

2010 Funding Execution

36

Investor type breakdownPGB2020

Geographical breakdownPGB2020

The forecasted gross

funding for 2011 is

EUR 5 bln lower than

in 2010.

2011 Funding Programme

37Source: Ministry of Finance and Public Administration

State Budget 2011, Oct 2010

Gross Funding

2520

0

5

10

15

20

25

30

2010

e

2011

f

EU

R b

ln

The 2011 Portuguese

Funding Programme

estimates bond

issuance of EUR 18

to 20 bln, which is

relatively low when

compared with most

other Euro Area

sovereigns – scarcity

value


38

Source: Barclays Capital (January 4, 2011)

Medium and long-term funding

0

50

100

150

200

250

300

Ita

ly

Germ

any

Fra

nce

Spain

Ne

therland

s

Belg

ium

Port

uga

l

Aust

ria

Fin

land

EU

R b

ln

2010 2011

Main topics of the

2011 Funding

Programme


39

�Borrowing needs: around EUR 20 billion

�OT issuance: EUR 18 to 20 billion�Launch of 1 or 2 new benchmarks

�Reopening of new lines and off-the-run (through auctions of 1 or 2 lines)

�Maximum outstanding of EUR 10 bln (per line)

�BT net issuance: marginally positive, with the launch of ten new

lines

�Focused on minimizing the debt cost in a long-term perspective and

non exposure to excessive risks

�MTN issuance on an opportunistic basis and also to reach new

investors

�Other short term funding sources can also be used (such as repos,

credit facilities and commercial paper)

Planned issuance for

the first quarter of

2011


40

Subject to market conditions, the guidelines for the first quarter of

2011 are:

�Launch of a new syndicated OT series

�Tap of 4 to 6 OT series, via auction

�Hold the following BT auctions:

Funding execution

up-to-date


41

The execution of the funding programme for 2011 is proceeding

according to plan, and over EUR 4 bn have already been raised.

* including non-competitive allocation

3.14.029%1017BT 20JAN201219/01/11

3.26.717%648OT 4.8 JUN 2020

2.65.395%691OT 3.6 OCT 201412/01/11

2.63.686%541BT 22JUL201105/01/11

bid-to-

cover

Average

YieldAmount (EUR mln)*InstrumentAuction Date

110January 201318/01/11

50January 202107/01/11

1000July 201205/01/11

Amount (EUR

mln)MaturityTrade Date

•PGB represent 69%

of total outstanding

debt

Source: IGCP42

OT redemption profile as at January 13th

, 2011

0

2

4

6

8

10

12

14

16

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

EU

R b

ln

Issued before 2011 Issued in 2011

Debt distribution as at Dec 31, 2010 Saving and

Treasury

Certificates

(Retail)

11%

BT - Treasury

Bills

13%

OT - Standard

Long Term

Government

Bonds

69%

Other

7%


43

V. Wrap Up

44

� Portugal is suffering contagion effects

� Broad political and social consensus on the need to pursue the

consolidation of public finances with a significant austerity package in

the 2011 budget

� Regaining market confidence and normalizing the economy’s access to

external funding are the main priorities

� Structural reforms already implemented will produce results in the

medium term

� Stronger activity growth should come from structural reforms and

from the expansion to fast growing emerging economies in the South

Atlantic

Current risk premium on Portuguese debt offers an excellent

investment opportunity

Wrap Up

45

Appendix

RoP Ratings

46

Agency Rating Since Outlook Action

Standard & Poor's A- Apr-10Creditwatch

NegativeNov-10

Moodys A1 Jul-10Review for possible

downgradeDec-10

Fitch ratings A+ Dec-10 Negative Dec-10

Tel: +351 21 7923300

Fax: +351 21 7993795

E-mail:[email protected]

Web site: igcp.pt

Reuters pages: IGCP01

Bloomberg pages: IGCP

Further information on the Portuguese economy can be obtained from:

The Office of Planning, Strategy, Assessment and International Relations

Budget Department

Statistics Portugal

Banco de Portugal (Central bank)

www.gpeari.min-financas.pt

www.dgo.pt

www.ine.pt

www.bportugal.pt

MTS Portugal:http://www.mtsmarkets.com/Products/~/media/MTS/Available_Markets/Portugal.pdf

Reuters pages: PT/MTS1

Further information on the Portuguese secondary market can be obtained from:

january 2011january 2011 - igcp · state budget 2011, oct 2010 –for 2010 and 2011 data (a)...

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