Anti-poverty campaigners call on Portugal’s creditors to write down debts.
Just as in Ireland and Greece, Portugal’s economic crisis stems from reckless lending by foreign private banks, anti-poverty group Jubilee Debt Campaign has said, following the resignation of the Portuguese Prime Minister. (1)
Jubilee Debt Campaign’s Director Nick Dearden said:
“An EU and IMF bailout would be for private banks, not the Portuguese people. It would simply allow banks to keep collecting their money, even though in many cases it may well have been recklessly and even unjustly lent. The lesson from debt crises in developing countries is that new loans and austerity affect the poorest most of all and strangle hopes of recovery. Rather than being bailed-out, lenders need to be held responsible for their reckless behaviour.”
The largest outstanding loans to Portugal are from Spanish (€86 billion), German (€40 billion), French (€37 billion) and British (€25 billion) banks.(2) Of the €216 billion, just €43 billion (20 per cent) is owed by the Portuguese government.(3)
Jubilee Debt Campaign’s Director Nick Dearden continued:
“Like Greece and Ireland, Portugal’s debt levels are totally unsustainable in the long-term. Adding more foreign debt to this pile – as the European Union is offering – will only makes things worse. Many developing countries went through 20 years of pain, poverty and deprivation because this logic was not accepted. To prevent recurring debt crises across the world, an international court is needed to hold lenders to account for irresponsible behaviour.”
In 2008, Portugal’s private sector debt was 225 per cent of GDP. In contrast, public sector debt was 65 per cent of GDP. External debt was a huge 200 per cent of GDP, though its net debt was probably closer to 100 per cent of GDP.(4)
Contact: Jubilee Debt Campaign on +44 (0)20 7324 4722 or + (44) 07932 335 464
(1) Stabe, M., Minto, R., Feeney, P. and Bernard, S. (2010). Bank exposure: The Eurozone risk. The Financial Times. London. 13/12/10.
(2) Stabe, M., Minto, R., Feeney, P. and Bernard, S. (2010). Bank exposure: The Eurozone risk. The Financial Times. London. 13/12/10.
(3) Bernard, S., Mathurin, P., Murphy, M. and Stabe, M. (2010). European banks’ sovereign debt exposure. Financial Times. London. 12/11/10.
(4) IMF. (2009). Portugal: Staff report for the 2009 Article IV Consultation. IMF. Washington DC. 18/12/09.