Portugal is the OECD country where the central bank has the highest percentage of negotiable government debt in the market, according to a report released this Monday (22) by that institution.
In a report on the evolution of the public debt, the Organization for Economic Co-operation and Development (OECD) indicates that Portugal is the country of the 38 countries analyzed most dependent on the central bank, as it owns 50% of its debt has.
According to the OECD, on average 25% of the outstanding debt of the countries analyzed is held by central banks.
“However, this number ranges from 0% in Chile, the Czech Republic, Denmark and Norway to 50% in Portugal”.
The OECD further warned that market conditions had deteriorated as liquidity in government bond markets tightened, and recommended the use of a variety of instruments to support liquidity.
In addition to the increase in financing costs, he points out that there was “a deterioration in market and liquidity conditions”.
“The main factors cited for this decline were macroeconomic uncertainty, monetary policy developments, geopolitical risks and a deterioration in investor sentiment,” they point out.
The OECD notes that the rollback of central bank asset purchase programs may also put pressure on markets in a number of ways, which it says “could increase costs to market participants and therefore returns, although the exact effects depend of the pace and magnitude of the tightening”.
For example, it reiterates “the importance of debt managers using different tools to support liquidity”, including through improved communication with the market, using existing bonds and buybacks.
The OECD also notes that country borrowing needs and debt levels remain higher compared to the pre-pandemic period, and recalls that fiscal responses to the Covid-19 crisis have led to record levels of debt issuance in the organization’s countries.
Source: DN
