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Portugal External Public Debt
Portugal's external public debt was on a steeply rising
trend
from 1976 onward, reaching nearly US$18.5 billion at the
end of
1987, its peak dollar magnitude. After that year, early
repayments of principal slightly reduced outstanding debt
to
slightly over US$18.4 billion in 1990. As the proceeds
from
privatization of nationalized enterprises were applied to
debt
reduction, Portugal's external public obligations would
continue
to diminish.
Debt-service indicators revealed much about the
relative
burden of Portugal's foreign indebtedness, as well as the
capacity of the economy to service this debt (see
table 10,
Appendix). More relevant than the dollar value of the debt
was
the ratio of public external debt to GDP, which increased
inexorably from 1980 to 1985 (from more than 36 percent to
more
than 80 percent, its highest level) and then abruptly fell
to
just under 29 percent in 1990. Total debt service
(scheduled
amortization and interest payments) as a share of current
account
credits (foreign exchange income from exporting goods and
services, as well as from unilateral remittances) rose
from over
15 percent in 1980 to 37 percent in 1985 and thereafter
fell to
16.7 percent in 1990. Portugal's success in reducing its
relative
external debt-servicing burden by about half between 1985
and
1990 was largely the result of burgeoning export receipts,
notably manufactured goods and tourism income, although
growing
emigrant worker remittances and transfers from the EC also
played
a role.
The interest/GDP ratio, which measures the net burden
on the
Portuguese economy, more than doubled from 3 percent in
1980 to
6.5 percent in 1985 before falling back to 2.9 percent in
1990.
The external debt/reserves indicator, which compares
Portugal's
foreign/public obligations (mainly the stock of long- and
medium-term debt) with its gross foreign assets (mainly
liquid
foreign exchange holdings of the Bank of Portugal and the
Treasury, with gold valued at market prices) almost
tripled
between 1980 and 1985, when the country's external debt
exceeded
its official reserves by 67 percent. As a consequence of
the
rapid buildup of Portugal's official reserves from 1985
onward,
the external debt/reserves indicator was reduced to just
over 72
percent in 1990. This massive accumulation of foreign
assets at
the disposal of official institutions reflected not only
Portugal's export drive, but also its success in
attracting
direct investments from its EC partners.
* * *
The Organisation for Economic Co-operation and
Development
(OECD) annual economic surveys give an authoritative and
readily
available exposition of the country's economy with a
strong
policy orientation. The quarterly Country Report:
Portugal
and the annual Country Profile: Portugal from the
Economist Intelligence Unit (EIU) provide current economic
coverage, and Mark Hudson's Portugal to 1993: Investing
in a
European Future, also published by EIU, is
particularly
useful for analysis of Portugal's economy in the context
of that
country's accession to the EC. For additional current
information
on Portugal's private and public sector economic
activities,
special supplements of the Economist and
Financial
Times, both published in London, offer well-written
coverage
for the nonspecialist. From time to time, Euromoney
publishes special reports on up-to-date banking and
financial
developments in Portugal. The Bank of Portugal's annual
reports
provide detailed information, including copious
statistical
tables, on the Portuguese economy.
Valentina Xavier Pintado's Structure and Growth of
the
Portuguese Economy, published by the European Free
Trade
Association, is the definitive study of the economy during
the
early Salazar period. Eric N. Baklanoff's The Economic
Transformation of Spain and Portugal is a comparative
analysis of accelerating economic growth in the two
Iberian
countries in response to the new, more open,
market-oriented
economic policies initiated in 1959 by the Franco and
Salazar
regimes.
Among the more useful books on the postrevolutionary
period
in English are Rodney J. Morrison's Portugal:
Revolutionary
Change in an Open Economy; the World Bank's
Portugal:
Current and Prospective Trends, a report based on the
findings of a mission to Portugal in 1978; and
Portugal:
Ancient Country, Young Democracy, edited by Kenneth
Maxwell
and Michael H. Haltzel. This edited work, published by the
Wilson
Center Press in 1990, includes three chapters on the
economy.
Two comparative technical studies that illuminate
Portugal's
integration with the European Community include Juergen B.
Donges, The Second Enlargement of the European
Community
and European Integration and the Iberian Economies,
edited
by George N. Yannopolous. (For further information and
complete
citations,
see
Bibliography.)
Data as of January 1993
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