The finance minister warned this Wednesday about the risk of funding a state whose loans are mostly retail, which may have early repayments, compared to loans negotiated with securities issued on international markets.
At a parliamentary hearing at the Commission on Budget and Finance (COF), Fernando Medina emphasized that savings certificates (CA) cannot carry the same weight and perform the same functions as treasury bonds (OT) in public finance.
While T-bills are a retail product, i.e. through which the state finances itself from small investors such as families, treasury bonds or treasury bills are debt securities issued by the Republic on the international market for large investors.
The minister recalled that, for example, 10-year treasury bonds are a security issued at a fixed rate during this period, while KOs have a variable rate and can be withdrawn by holders of this instrument at any time.
That is, while CCs allow for early reimbursement, OTs offer the government greater predictability of costs over that period and greater stability, since in the long run, in the event of a run on repayment, the Republic may have to finance in the market at less favorable conditions.
“There is not and cannot be a replacement of one instrument by another. This would be a mistake in Portuguese debt management,” he said, defending OT’s role in the state’s funding structure.
Asked several times about the “E-series” CA reward (with a maximum base rate of 3.5%) and its replacement by a new series (with a maximum base rate of 2.5%), Medina defended that “the reward that the current series of questions is higher than what the distinguished members have mentioned is the average reward on deposits made by Portuguese banks.”
The supervising minister also criticized the Technical Department of Budget Support, which considered that it is more expensive for the state to finance itself in the market than through Central Asia.
In a report released on Monday, the division, coordinated by Rui Nuno Baleiras, claims that 10-year OT “is the most expensive option for the state in every quarter of its 10 years of life,” while CA’s “Series F” is the cheapest. funding option “every quarter until the middle of the 53rd quarter of life”.
For Medina, the report released by UTAO “is not one of the happiest moments in this institution.”
Author: Portuguese
Source: CM Jornal
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