In 2021, the highest rates of government guarantees in the EU were recorded in Germany, Austria and Finland 

The most common form of contingent liabilities in the EU countries is government guarantees on the liabilities, and occasionally, on the assets of third parties. In 2020 and 2021, government guarantees provided in the EU increased notably, following the onset of the COVID-19 pandemic. 

In 2021, the highest overall rate of government guarantees was recorded in Germany (17.3% of gross domestic product; GDP), Austria (17.0%), Finland (17.0%), Italy (16.0%) and France (15.2%). On the lower end of the scale, rates of less than 1% of GDP were recorded in Ireland, Bulgaria, Czechia and Slovakia. 

This information comes from data on contingent liabilities and non-performing loans published by Eurostat today. This article presents a handful of findings from the more detailed Statistics Explained article.

Source dataset: gov_cl_guar

In most EU Member States, the central government is the predominant guarantor. A notable level of state and/or local government guarantees can also be seen in Finland, Denmark, Sweden, France, Austria, Germany and Belgium. In some countries, the stock of government guarantees increased by as much as 11.2 percentage points (pp) of GDP between 2019 and 2021 (pre-COVID-19 to the end of 2021). Generally, guarantee growth decelerated in 2021 compared with 2020 (the first year of the pandemic). In 2021, the guarantee rates in some countries decreased in terms of % of GDP, which was also due in part to GDP growth. 

Liabilities of public corporations highest in Greece

The level of liabilities of public corporations classified outside general government in 2021 varied widely across the EU Member States. Significant amounts of liabilities were recorded in Greece (163.0% of GDP), ahead of the Netherlands (99.1%), Germany (94.9%), Luxembourg (73.5%) and France (70.2%).

In contrast, small amounts of public corporation liabilities were recorded in Slovakia (3.6%), followed by Spain (5.6%), Romania (8.3%), Croatia (9.1%), Lithuania (10.0%) and Bulgaria (11.6%). 

Source dataset: gov_cl_liab

 
The main reason for the high level of these liabilities in certain Member States is that the data include government-controlled financial institutions, for example public banks. Most of the banks’ liabilities consist of deposits held by households or other private or public entities. In general, financial institutions report high amounts of debt liabilities and have, at the same time, a significant level of assets which are not captured in this data collection. 

Cyprus remained the country with the highest level of non-performing loans 

In 2021, Cyprus remained the country with the highest stock of non-performing loans (assets) of the general government, at 20.2% of GDP. This was due to a large transaction in 2018, whereby non-performing loans from a Cypriot public financial corporation (classified outside government) were transferred to a government unit.

Three other EU Member States recorded a share higher than 1% of GDP: Slovenia (1.8%), Portugal (1.4%) and Croatia (1.1%). For a significant majority of EU Member States, non-performing loans decreased in 2021 compared with 2020. For Cyprus, Slovenia and Portugal, the majority of non-performing loans refer to loans of financial defeasance structures. In the case of Croatia, the figure mainly refers to the loans of a national development bank (classified inside general government). 

Portugal and Slovakia with largest liabilities related to off-balance PPPs 

In 2021, liabilities related to off-balance public-private partnerships (PPPs, long-term construction contracts where assets are recorded outside government accounts) were at or below 2% of GDP in all EU countries. Portugal had the highest share (2.0% of GDP), followed by Slovakia (1.5%) and Hungary (0.9%). 

In both Portugal and Slovakia, the liabilities relate mainly to motorway projects. In many EU countries, off-balance PPPs were observed at the central government level. Only in a few countries, like Spain and Belgium, were they also related to state and local governments.