Structure of government debt
Data extracted in June 2022
Planned update: June 2023
In the context of the Stability and Growth Pact's Excessive deficit procedure notification process, Eurostat publishes general government government gross debt data twice a year, in April and October, while quarterly general government gross debt data are transmitted in line with Regulation (EU) No 549/2013 (ESA 2010 transmission programme). In order to analyse the debt structure in European countries, Eurostat additionally collects, in an annual survey, data on European Union (EU) Member States' general government gross debt by sector of debt holder, by instrument, by original and remaining maturity and by currency of issuance. The survey also collects information on (one-off and standardised) guarantees granted by the general government to non-government units, on the market value of the Maastricht debt instruments and on the apparent cost of government debt. One-off guarantees are contingent liabilities which are not included in general government gross debt.
This article presents the main results of the latest survey on the structure of general government debt and its relationship to gross domestic product (GDP), fully or partly completed by the 27 EU Member States and Norway.
General government gross (Maastricht) debt as a percentage of GDP
Maastricht debt followed an upward trend after the 2008 financial crisis. From a high point at the end of 2014 (86.8 % of GDP), at EU level, the debt to GDP ratio decreased continuously to reach 77.5 % of GDP in 2019. Then, the ratio increased sharply in 2020 to 90.0 % of GDP, mainly due to the effects of the COVID-19 pandemic. The 2020 increase represents the steepest increase observed in the time series since 1995, and the highest level of general government gross debt as percentage of GDP recorded.
During 2021, the EU general government gross debt decreased to 88.1 % of GDP, corresponding to a decrease of 1.9 percentage points (pp.) between the end of 2020 and the end of 2021. In the euro area, the general government gross debt decreased from 97.2 % of GDP at the end of 2020 to 95.6 % at the end of 2021 (or by -1.6 pp.).
Between the end of 2020 and the end of 2021, 20 EU Member States and Norway registered a decrease in their debt to GDP ratio, and seven Member States registered an increase. The largest decreases were recorded in Greece (-13.1 pp.), Cyprus (-11.4 pp.), Portugal (-7.8 pp.), Croatia (-7.5 pp.), Denmark (-5.4 pp.), Slovenia (-5.1 pp.), Belgium (-4.6 pp.) and Italy (-4.4 pp.), while the largest increases were recorded in Czechia (+4.2 pp.), Malta (+3.6 pp.) and Slovakia (+3.3 pp.).
At the end of 2021, 14 out of 27 EU Member States reported debt to GDP ratios higher than the reference value of 60.0 %, while seven EU Member States recorded debt to GDP ratios of more than 100.0 %: Greece recorded the highest debt to GDP ratio at 193.3 %, followed by Italy (150.8 %), Portugal (127.4 %), Spain (118.4 %), France (112.9 %), Belgium (108.2 %) and Cyprus (103.6 %).
The lowest debt to GDP ratio was registered by Estonia at 18.1 % of GDP at the end of 2021, followed by Luxembourg (24.4 %), Bulgaria (25.1 %), Sweden and Denmark (both 36.7 %), Czechia (41.9 %), Lithuania (44.3 %), Latvia (44.8 %), and Romania (48.8 %), as well as Norway (43.2 %).
Breakdown by subsector of general government
- Central government (S.1311);
- State government (S.1312);
- Local government (S.1313);
- Social security funds (S.1314).
Figure 2 gives an overview of the subsector breakdown, as a percentage of total debt for all subsectors, i.e. not consolidated between different levels of government.
For 24 of the 27 EU Member States, the central government represented more than 75.0 % of the general government debt (not consolidated between subsectors) at the end of 2021, while other subsectors of general government had a comparatively large share in Sweden (34.1 %), Germany (33.1 %) and Spain (25.2 %) as well as in Norway (37.4 %).
The share of local government debt (non-consolidated between subsectors) was at 37.4 % in Norway. In Sweden, the share of local government debt was 32.8 %. Local government debt also played an important role in Denmark (18.3 %), Finland (15.7 %) and Estonia (14.0 %).
In Germany (26.9 %) and Spain (18.3 %), state governments accounted for a significant share in the total gross debt (not consolidated between subsectors). State government as a subsector of general government exists only in four Member States, namely Belgium, Germany, Spain and Austria. The debt share of state government was 15.2 % in Belgium and 6.9 % in Austria.
The impact of social security funds on the general government debt continues to be relatively small: contributions of less than 5 % were recorded in 23 countries (out of the 25 reporting countries with a social security funds' subsector). Only three countries had somewhat higher ratios of debt for social security funds: France (9.4 %), Spain (5.7 %) and the Netherlands (4.2 %).
Impact of consolidation
The general government debt has to be consolidated within each subsector and between subsectors at the level of general government. This implies that the debt issued by one subsector and held by another one should be excluded from the general government debt. When debt of one subsector of general government is held by another subsector, general government gross debt is then lower than the sum of subsector gross debt. Table 1 illustrates this effect in percentage of total non-consolidated debt (consolidated within subsectors but not between).
For 16 of the 27 EU Member States and Norway the consolidation impact between the subsectors of general government had a limited impact, reducing the general government debt by less than 5 %. A significant consolidation effect was observed in Cyprus (38.5 %), Latvia (23.5 %), Spain (19.9 %), the Netherlands (17.5 %) and Estonia (16.9 %). Significant consolidation effects are often due to central government liabilities in deposits held by local government and social security funds, for example in Estonia, Latvia and Cyprus. The level of consolidation tends to be influenced by the growing prevalence of cash pooling arrangements.
On the other hand, seven countries showed no consolidating amounts between subsectors of general government or consolidating amounts below 1 %: Denmark, Germany, Croatia, Lithuania, Malta, Slovenia and Norway.
Breakdown by financial instrument
The Maastricht debt is divided into the following categories according to the ESA 2010 classification:
- currency and deposits (AF.2);
- debt securities (AF.3); and
- loans (AF.4).
The breakdown of debt by financial instrument is presented in Figure 3.
Data for 2021 show that for the EU, debt securities represented 82.3 % of the general government Maastricht debt, loans represented 14.7 %, and currency and deposits represented 3.0 %. For the euro area, debt securities represented 82.6 %, loans represented 14.2 %, and currency and deposits represented 3.1 %.
For 25 of the 27 EU Member States, the most used debt instrument remained debt securities at the end of 2021; ranging from a share of general government Maastricht debt of 22.9 % in Greece to 91.9 % in Czechia.
Greece (75.2 %) and Estonia (62.4 %) as well as Norway (62.9 %) registered high shares of loans. Significant loan to total debt ratios were also recorded for Cyprus (35.3 %), Sweden (30.8 %) and Croatia (29.7 %). The countries reporting a higher share of loans tended to be those either having a relatively low level of general government gross debt (e.g. Estonia), a relatively high share of debt of subcentral sectors of government (e.g. Sweden) or having benefited in recent years from loans of EFSF, ESM, IMF and other international assistance (e.g. Greece and Cyprus).
At the end of 2021, currency and deposits represented less than 5 % of total debt for 21 countries. In contrast, currency and deposits accounted for 12.8 % of total general government gross debt in Portugal (due to saving certificates), 10.6 % in Ireland (due to defeasance structures) and 8.4 % in Italy (due to saving certificates).
Breakdown by sector of debt holder
Figure 4 presents general government gross debt by sector of the debt holder: non-financial residents (non-financial corporations, households and non-profit institutions serving households), financial residents (financial corporations) and non-residents (rest of the world).
At the end of 2021, government debt was mainly held by resident financial corporations sector in 13 EU Member States for which data is available. Its share was the highest in Sweden (73.6 %), followed by Denmark (73.1 %), Czechia (67.1 %) and Croatia (65.2 %). At the other end of the scale, the smallest proportion of debt held by resident financial corporations was recorded in Cyprus (8.4 %), ahead of Estonia (28.3 %), Latvia (32.6 %), Lithuania (35.0 %) and Ireland (36.0 %).
The debt share held by non-residents (rest of the world sector) was also significant in a large number of countries for which data is available, but highly variable. Rest of the world (non-residents) was the largest debt holder in 13 EU countries and Norway, with percentages starting from 49 % and higher: Cyprus (89.4 %), Estonia (69.7 %), Lithuania (64.7 %), Latvia (63.9 %), Austria (60.6 %), Slovenia (55.2 %), Belgium (53.8 %), Ireland (53.6 %), Finland (51.8 %), Luxembourg (49.7 %), Slovakia (49.6 %) and Romania (49.2 %), as well as Norway (55.2 %). In contrast, this proportion was only 19.1 % in Sweden and 23.8 % in Malta.
The resident non-financial sectors (non-financial corporations, households and non-profit institutions serving households) played a major role as debt holder in Hungary (25.4 %), Malta (17.5 %), Portugal (13.2 %) and Ireland (10.4 %).
Breakdown by original/initial maturity
The debt survey aims to provide detailed information on the time structure of government debt based on its original maturity. The maturity is subdivided into several maturity brackets: less than one year, one to five years, five to seven years, seven to ten years, ten to fifteen years, fifteen to thirty, and more than thirty years, as well as the summary category of more than one year. For some countries, which did not provide the complete breakdown, only two categories are shown: less than one year (short-term) and more than one year (long-term). For the other 17 countries, a detailed debt maturity breakdown is available. The share of short-term debt to total debt is illustrated in Figure 5.
General government gross debt classified by maturity reveals a common pattern: between 75.1 % (in Sweden) and nearly 100 % of the outstanding debt was incurred on a long-term basis. Short-term debt levels of less than or equal to 1 % were recorded in Lithuania (0.0 %) and Bulgaria (0.1 %).
The short-term debt ratio was significant in Sweden (24.9 %), Portugal (15.5 %), Denmark (13.2 %), Italy (13.1 %) and Germany (12.3 %) as well as Norway (27.3 %), while the short-term debt ratio also exceeded 10 % in France and Finland.
The countries providing a detailed long-term debt breakdown showed very different structures. This is shown in Figure 6.
Breakdown by remaining maturity
While the initial or original maturity of debt measures the time between issuance date and redemption date, the remaining maturity of debt measures the time left until the redemption date.
Figure 7 shows the share of central government gross debt with a remaining maturity of less than one year, at end 2020 and at end 2021, i.e. the share of the central government debt which was to be redeemed in 2020 and is due to be redeemed in 2021.
Data is available for 21 out of the 28 countries having completed the survey.
At the end of 2021, the highest shares of short-term remaining maturity in total central government debt were reported by Sweden (43.4 %), ahead of Estonia (29.6 %), Portugal (24.3 %), Germany (23.3 %), Italy (22.1 %) and Denmark (20.2 %), while the lowest shares were observed for Slovenia (6.0 %), Bulgaria (8.7 %) and Slovakia (8.9 %).
The largest reductions in the share of short-term remaining maturity of debt between the end of 2020 and the end of 2021 were observed for Slovenia (11.4 % at end 2020, 6.0 % at end 2021), Latvia (23.7 % at end 2020, 18.6 % at end 2021) and Hungary (16.7 % at end 2020, 12.8 % at end 2021), whereas the largest increases were noted for Romania (3.5 % at end 2020, 14.6 % at end 2021), Bulgaria (3.0 % at end 2020, 8.7 % at end 2021) and Sweden (39.7 % at end 2020, 43.4 % at end 2021).
Breakdown by currency of denomination
As shown in Figure 8, for 18 Member States of the 27 countries for which 2021 data is available, all or almost all (>99 %) of their central government gross debt at face value was denominated in national currency (euro). (Please see the notes below.)
Among euro area countries, only for Germany was more than 1 % of the central government gross debt not denominated in euro.
Only in three EU Member States was more than 50 % of their central government gross debt denominated in foreign currency at the end of 2021: Bulgaria (74.1 %, note that Bulgaria has a currency board arrangement vis a vis the euro), Croatia (72.0 %) and Romania (52.1 %). These three countries are not part of the euro area and the major share of their foreign currency debt is denominated in euro.
The most prominent decreases in the ratio of foreign currency debt to total debt between the end of 2020 and the end of 2021 were observed in Bulgaria (82.0 % at end 2020, 74.1 % at end 2021), Denmark (10.1 % at end 2020, 2.9 % at end 2021) and Sweden (20.0 % at end 2020, 17.1 % at end 2021), while Romania (51.1 % at end 2020, 52.1 % at end 2021) and Hungary (21.7 % at end 2020, 22.4 % at end 2021) increased the share of foreign currency debt.
Figure 9 presents the share of outstanding central government debt issued in euro at the end of 2021. The debt denominated in euro is equal to the debt issued in national currency for the 19 euro area member countries. 100 % of the stock of government debt was denominated in euro in Belgium, Estonia, Ireland, Cyprus, Lithuania, Luxembourg and Finland. A share higher than 99 % of total central government gross debt was denominated in euro in Portugal, Malta, France, Latvia, Spain, Slovakia, the Netherlands, Slovenia, Italy, Austria and Greece (in descending order). Germany reported a share of 97.6 %.
In contrast, the major issuing currency in the non-euro countries Denmark (97.1 % issued in Danish krone), Czechia (92.8 % issued in Czech koruna), Sweden (82.9 % issued in Swedish Krona), Poland (77.9 % issued in Polish zloty) and Hungary (77.6 % issued in Hungarian forint) was their respective national currency.
Apparent average cost of government debt
The apparent average cost of central government debt (accrued interest payable over the period as a percentage of the average outstanding debt) shows the past and present differences between countries in the conditions for accessing the financial markets. Based on the replies of 27 EU Member States and Norway, the analysis of apparent average cost of central government debt is shown in Figure 10.
The apparent average cost of central government gross debt in 2021 varied between 0.3 % in Estonia, 0.6 % in Finland, 0.7 % in Germany at one end of the scale and 3.2 % in Hungary and 3.3 % in Romania at the other.
Comparing the 2021 data with 2020, decreases in implicit rates were observed for 23 countries, no change for Hungary and Denmark, and increases for France and Italy (increase by 0.2 pp. and 0.1 pp. respectively). The largest decreases were observed for Lithuania (1.9 % in 2020, 1.2 % in 2021), followed by Malta (2.8 % in 2020 versus 2.2 % in 2021), Croatia (2.7 % in 2020, 2.3 % in 2021), Latvia (1.6 % in 2020, 1.1 % in 2021) and Slovenia (2.2 % in 2020, 1.8 % in 2021). As this measure of the cost of debt depends on interest rates prevailing at the moment of issuance in the past, it is normally not very sensitive to the most recent market trends, provided that the composition of debt is mainly long-term. The large decreases observed between 2020 and 2021 are a reflection of the very low interest rates prevailing during 2021 and the large volume of new issuances in 2021 as a result of the COVID-19 pandemic.
Government guarantees as a percentage of GDP
The survey collects also data about guarantees granted by general and central government to non-government units. These guarantees (both 'one-off' and 'standardised') are not part of government gross debt, as they are contingent liabilities, being contingent on the actual call of the guarantee.
Based on 27 replies from EU Member States, the ratio of government guarantees provided by central government on debt of non-government units as a percentage of GDP, is shown in Figure 11. At the end of 2021, the amount of government guarantees exceeded 10 % of GDP in five countries: Italy (16.0 %), Finland (14.7 %), Greece (14.3 %), Austria (12.9 %) and Spain (11.4 %), out of 24 countries reporting data for 2021. At the end of 2020 for which data is also available for Germany, Hungary and the Netherlands, the ratio of 10 %-to-GDP was exceeded in Germany, Spain, France, Italy, Luxembourg, Austria and Finland.
At the end of 2021, a ratio to GDP of less than 5 % was recorded in Ireland (0.3 %), Bulgaria (0.4 %), Czechia (0.7 %), Slovakia (1.0 %), Lithuania (1.1 %), Latvia (1.6 %), Croatia (1.7 %), Estonia (1.8 %), Poland (2.9 %), and Romania (3.2 %).
Between 2020 and 2021, ratio of the stock of guarantees granted by central governments as a percentage of GDP decreased in half of the countries out of 24 for which data is available. The largest decreases were reported by Luxembourg (-1.7 pp), Austria and France (both -1.4 pp), while data for Greece and Italy shows the largest increases (8.0 pp and 2.9 pp respectively). The decreases mainly relate to the guarantees provided in national schemes newly formed in 2020 or extended as a policy response to the COVID-19 pandemic.
Market vs. face value
The market value is the price as determined dynamically by buyers and sellers in an open market.
In Council Regulation (EC) No 479/2009, as amended, the face value is used. This is equal to the undiscounted amount of the principal that the government will have to pay to creditors at maturity.
Debt statistics cover data for general government as well as its subsectors: central government (S.1311), when applicable state government (S.1312), local government (S.1313) and when applicable social security funds (S.1314).
Maastricht debt comprises only the following instruments:
- AF.2: The category 'currency and deposits' consists of currency in circulation and all types of deposits in national and in foreign currency.
- AF.3: The category 'debt securities' consists of negotiable financial instruments that are bearer instruments and are usually traded on secondary markets or can be offset on the market, and do not grant the holder any ownership rights in the institutional unit issuing them.
- AF.4: The category 'loans' consists of financial instruments created when creditors lend funds to debtors, either directly or through brokers, which are either evidenced by non-negotiable documents or not evidenced by documents.
Debt figures on general government statistics and each of its subsectors are reported consolidated.
Consolidation is a method of presenting statistics for a grouping of units, such as institutional sectors or subsectors, as if it constituted a single unit. Consolidation thus involves a special kind of cancelling out of flows and stocks: eliminating those transactions or debtor/ creditor relationships that occur between two transactors belonging to the same grouping. Usually the sum of subsectors should exceed the value of the general government sector. Subsector data should be consolidated within each subsector, but not between them. ESA 2010 recommends compiling both consolidated and non-consolidated financial accounts. For macro-financial analysis, the focus is on consolidated figures. The Maastricht debt is also consolidated.
The Eurostat 2022 government debt structure survey
The survey launched by Eurostat on government debt structure contains a set of five tables to be completed with general government gross debt data and its subsectors' debt (central government, state government, local government, social security funds) for 2021 and the three preceding years, detailing gross debt by financial instrument, sector of debt holder and original maturity, and a table with additional classifications of government debt (by remaining maturity, currency of issuance, apparent cost of debt, market value of gross debt and guarantees (contingent liabilities)).
For the EU-27 and EA-19, data from ESA table 28 (quarterly government debt) and EDP notification supplied in April 2022 is used to complement the analysis. For all countries, the data reported in the structure of government debt survey corresponds to the general government gross debt totals submitted in the context of the April 2022 Excessive Deficit Procedure notification.
For all 27 EU Member States and Norway, the data used in this article was reported in the structure of government debt survey. The survey is not fully completed by all countries. Hence the number of countries shown for each breakdown of gross debt as well as guarantees varies.
The analysis on breakdown by currency, apparent cost of the debt and state guarantees is based on central government data.
The GDP supplied to Eurostat in the context of the April 2022 EDP notification is used in the graphs and analysis.
Breakdown by denomination in national and foreign currency: Denominated in national currency means issued in national currency as well as issued in foreign currency and hedged (using financial derivatives) to national currency. The reporting may not yet be fully harmonised between reporting countries. Countries are encouraged to report hedged foreign currency amounts to national currency using financial derivatives under domestic currency. A small number of countries may report the stock of foreign currency debt at nominal value, implying a small distortion in the shares of domestic and foreign currency.
The coverage of guarantees may still vary across countries and have an expanding coverage over time.
Some breakdowns of gross debt by detailed original maturity, by sector of debt holder and by currency may not sum to the total debt instrument / gross debt, in case detailed information was not available for some items.
Portugal: Information on the detailed split of long-term loans by original maturity is partially available. For this reason, total long-term loans exceed the detailed breakdown.
Greece: The coverage of data relating to the remaining maturity of debt, currency of issuance, apparent cost of debt excludes extra-budgetary units of central government. Thus the coverage of central government data for these indicators is limited to S.1311.1, the budgetary central government. For guarantees: the amounts for scheme of standardised guarantees are included (taking into consideration COVID-19 related measures).
Denmark: The coverage of data relating to the remaining maturity of central government gross debt is limited to debt securities and deposits.
Germany: Only asset guarantees provided to publicly controlled monetary financial institutions are included under guarantees given by government units on non-government borrowing to financial corporations (S.12) sector, see also https://www.destatis.de/EN/Themes/Government/Public-Finance/EU-Directive-Budgetary-Frameworks/Tables/guarantees.html. Remaining maturity breakdowns are estimated.
Monitoring and keeping government debt in check is a crucial part of maintaining budgetary discipline which is essential as Europe undergoes dramatic demographic changes. Its ageing population, in particular, is expected to pose major economic, budgetary and social challenges.
The Protocol on the excessive deficit procedure (EDP) annexed to the Maastricht Treaty specifies that the ratio of gross government debt to GDP must not exceed 60 % at the end of the preceding fiscal year. The application of the Protocol is made operational by Council Regulation (EC) No 479/2009, as amended.
Fiscal data are compiled in accordance with national accounts rules, as laid down in the European System of Accounts (ESA 2010) adopted in the form of a Regulation (EU) No 549/2013 of the European Parliament and of the Council of 21 May 2013. The full text of compilation of General government debt data complies with ESA 2010 rules concerning the sector classification of institutional units, the consolidation rules, the classification of financial transactions and of financial assets and liabilities and the time of recording. The valuation is however different. Debt liabilities in ESA 2010 are valued at market value, whereas Maastricht debt is valued at nominal (face) value. Most data in the publication on the structure of government debt refer to general government gross debt (and various breakdowns) expressed at face value.
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