Comments on: Portugal and the SGP

By: Edward

Edward — Thu, 23 Jun 2005 11:28:41 +0000

“I’m also surprised at the difference between total and primary balance, looks like interest is over 3% of GDP which “seems” high.”

I have no idea what lies behind this, but………

You have to remember with debt that what often matters just as much as the quantity is the *term structure*, ie when it is contracted, and when it is due. In the case of developing country debt this is what can make the difference between being healthy and having a crisis.

Now if Portugal still has a lot of debt outstanding from the late 90’s the interest will be higher than what they pay on new debt they issue now. This is the whole thing about the current indebtedness (both public and private), we are getting locked-in to very low rates. Any serious rise in interest rates would cause all sorts of problems. Fortunately, due to the so called ‘global savings glut’ I don’t think we will see this, although what we may see in some cases is a growing ‘risk premium’.

By: Dawn

Dawn — Thu, 23 Jun 2005 11:25:45 +0000

That’s something Portugal has been complaining about for years.

By: anne

anne — Thu, 23 Jun 2005 02:52:22 +0000

Edward, I am much in your debt. These posts are a wonder. Thank you.

By: David Weman

David Weman — Wed, 22 Jun 2005 23:16:49 +0000

Well, he was only prime minister for two years.

By: P O'Neill

P O'Neill — Wed, 22 Jun 2005 23:09:58 +0000

From their description of events, it sounds like there should be a SGP waiver (which I think would be the 17th) for when there is a change of government, since the new one has to clean up some of the shenanigans of the old one — like with Greece. I’m also surprised at the difference between total and primary balance, looks like interest is over 3% of GDP which “seems” high.

In fact, now that I think of it, wasn’t the PM for most of this mess our old friend, the head of the head office, Mr Barroso?