The Bank of Portugal closed 2023 with 80.5 billion euros of national public debt On your balance sheet, what is minus 3.7 billion than the supervisor at the end of the previous year. Although the supervisor purchased 3.6 billion euros in new securities throughout 2023, the fact that approximately double the value of the securities previously acquired reached maturity meant that the net balance, in the end, was a decrease in the value of the national debt held by the Bank of Portugal.
In compliance with the debt purchases determined by the European Central Bank (ECB), and which continued to have a progressive weaning throughout 2023, the “Bank of Portugal actively participated in the purchase of Portuguese public debt securities for the PSPP and for the PEPP (…), with 637 transactions with 19 financial institutions and acquired, in gross terms, 3.6 billion euros in Portuguese public debt securities.”
The PSPP and the PEPP are two of the programs launched by the ECB, at different times, to use the purchase of countries’ public debt as a way to stimulate the excess liquidity that the financial supervisor wants to see in the eurozone money market. . It was with these programs, among others launched previously, that the The Bank of Portugal already owns more than a third of the Portuguese public debt – debt that supervisors are not expected to be able to sell before maturity (neither to private investors nor to the Treasury and Public Debt Management Agency itself, or IGCP) because all purchases were made with a view to buy and hold until Due date.
The information, relating to the transactions carried out in 2023, is found in the Monetary Policy Implementation Report that the Bank of Portugal published this Monday late afternoon. The number of transactions (purchases, in general terms) made throughout the year – a average of 2.5 operations per dayapproximately, counting only the business days of the year, it still represents a decrease, since in the previous year the Bank of Portugal had carried out almost 1,450 transactions. This reduction is consistent with the fact that the ECB, while raising interest rates in 2023, decided to progressively reduce the pace of purchases made within the framework of the different programs.
“As a result of all the measures implemented, there was a new reduction of the balance sheet of the Bank of Portugal, 6% compared to 2022,” states the Bank of Portugal, adding that “the aggregate balance of the Eurosystem decreased by 13%.” The balance sheet of the Bank of Portugal fell to approximately 185 billion euros, not only due to lower exposure to public debt but also due to the end of extraordinary operations to provide liquidity to banks, known by the acronym TLTRO.
Even at the end of 2023, in December, “the Governing Council announced that the amount of expired securities acquired under the PEPP will continue to be reinvested, in full, until the end of the first half of 2024, but that, in the second half of , the portfolio of this program will be reduced, on average, by 7.5 billion euros per month, with reinvestments interrupted at the end of 2024,” indicates the Bank of Portugal, in reference to the (larger scope) program that was launched. launched in the context of the Covid-19 pandemic.
As the purchased securities reach maturity (and are paid to the Bank of Portugal, which, in turn, takes this amount to the income statement), the central bank will continue to make reinvestments -that is, applying the amounts received to the purchase of new securities-, but these reinvestments will be made progressively less intense, until ending at the end of this year. However, under the new monetary policy framework that will come into effect in September, national central banks will continue to purchase debt to always have a permanent “portfolio” of securitiesin ways for which there is still no detailed information.
This permanent portfolio of public debt securities, on the balance sheets of central banks, will be a way for the Eurosystem to try to ensure that the eurozone continues to live in a liquidity abundance scenario which is expected to mark the coming years – although a progressively lower abundance of liquidity. “The Eurosystem will continue to supervise the balance sheet normalization process and, in parallel, will delve into the design of new longer-term credit operations and the new structural portfolio that will be implemented in a later phase,” says the Bank of Portugal. in the report.
The bank of Portugal. Centeno says that he spoke with Miranda Sarmento about an operating loss of 1,054 million (covered with old provisions)
Source: Observadora
