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Republic of Portugal. PORTUGUESE SOVEREIGN DEBT THE ROLE OF IGCP. June 2007. IGCP – Public Debt and Cash Management. IGCP’s mission is to manage, in an integrated way, the cash balances and the direct debt of the Republic of Portugal, such a way as:

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Republic of Portugal



June 2007


IGCP – Public Debt and Cash Management

  • IGCP’s mission is to manage, in an integrated way, the cash balances and the direct debt of the Republic of Portugal, such a way as:
    • To fulfil the borrowing requirements of the Republic in a stable manner;
    • To minimize the cost of the government debt on a long-term perspective, subject to the risk strategies defined by the Government;
    • To optimize public sector cash management.
  • While providing a service of public interest, the IGCP develops its activities based on principles of efficiency, transparency and accountability.

IGCP – Institutional Framework

  • Public Debt Law
  • Budget (net borrowing limits)



  • Guidelines approved
  • Annual financing strategy approved
  • Direct information on demand
  • Annual financing programme proposal
  • Guidelines proposal
  • Quarterly report


The debt management agency






IGCP – Public Debt and Cash Management

  • The IGCP is subject to the authority and supervision of the Minister of Finance.
  • Statutory bodies:
    • Chairman of the Board of Directors
    • Board of Directors
    • Advisory Board
    • Audit Committee
  • The Board of Directors comprises the chairman and two executive directors, all of them appointed by the Council of Ministers for a mandate of three years. The Board is empowered to discharge all duties and to take all actions committed to the IGCP under the terms of the Law.

IGCP – Public Debt and Cash Management

  • Advisory Board:
  • Chairman of the Board of Directors
  • A member of the Board of Directors of the Bank of Portugal
  • Four experts in economic and financial matters, appointed by the Council of Ministers
  • Its duties include expressing opinion on the annual financing program for the central government and on the annual report on public financing and public debt management.

IGCP – Public Debt and Cash Management

The Audit Committee is composed of a chairman and two permanent members, appointed by the Minister of Finance, with the Chairman being nominated by the Inspectorate-General of Finances, while one of the permanent members should be an official chartered accountant.

The Audit Committee is responsible for following up and controlling the financial management of the IGCP and the Stabilisation Fund of the Public Debt, as well as supervising the respective accounting procedures.


IGCP – Public Debt and Cash Management

  • The activity of IGCP is subject to supervision by the Audit Court.
  • The annual auditing by the Portuguese Audit Court focuses on
    • public debt accounting
    • debt management procedures, and
    • management model
  • There can also be exceptional auditing procedures, whenever justified.

IGCP – Public Debt and Cash Management

  • IGCP also reports directly to the Parliament:
    • Whenever requested by the Budget and Finance Committee (usually once a year)
    • Information on outstanding debt, risk profile, borrowing programme, secondary market organisation and performance

IGCP – Public Debt and Cash Management

However being part of the public administration, the IGCP employees are not under the civil servants regime (labour contracts are established under the general labour law) and a corporate model has been adopted for its internal organization.

There is a Markets’ Committee, composed by the Directors, the heads of the Debt and Operations Departments and of the Financial Control, Research, Trading-room and Markets units, that meets once a week to analyse market developments, treasury forecasts, the position of the real debt portfolio against the benchmark and to define guidelines for the activity during the next week.

The Financial Control unit is responsible for all aspects related with risk and performance evaluation, internal control, procedures definition and internal auditing.


Audit Committee

Board of Directors

Advisory Board

Market Committee

Legal Affairs

Debt Management Department

Operations Department

Financial Control

Issuing and Markets Unit

Settlements Documentation

Research and Reporting

Trading Room


IT Systems

Retail Debt


IGCP – Public Debt and Cash Management

A flexible, entrepreneurial-like organisation


Annual Borrowing Programme

Debt Management Guidelines

  • Reflect Government’s strategic guidance on debt management, through:
    • Risk management model
        • Reviewed regularly (ca. 3 years)
        • Absolute and indicative limits on risks
    • Benchmark portfolio
  • Set limits, rules, methods and reporting requirements

Annual Borrowing Programme

Financing Strategy

  • Main objective
    • Minimizing the debt cost in a long-term perspective and non-exposure to excessive risks
  • Achieved through
    • Issuance strategy
    • Reduction of debt outstanding
    • Management of cash balances
    • Limitation and control of risks(including refinancing, credit and interest-rate risks)

Borrowing Needs

Arising from

  • Budget deficit
  • Debt servicing

Portugal: A European sovereign issuer

  • A founder of the Euro
  • A small sovereign issuer in a large domestic market
    • Increased competition
    • Elimination of currency risk
  • Decreasing financing needs expected
  • Active debt management
  • A market driven approach

Portugal has a lower debt burden than euro area average and better than “core” Europe and other rating peers

General government gross debt - 2006

Source: Eurostat (latest figures according to Excessive Deficit Procedures)


A Euro sovereign issuer with low borrowing needs

Debt structure per instrument

  • channelling them to the Euro government market

Gov. Bonds (gross) and T.Bills (net) issuance




EUR billion














Fixed-rate Gov. Bonds

Treasury Bills

a market driven borrowing strategy
A market driven borrowing strategy
  • Aiming at consolidating an efficient and transparent market

The strategic pillars:

The most important driving factor:

  • Predictability
  • Transparency
  • Accountability


  • Size
  • Tradability – Efficient and standard market conditions

A market oriented borrowing strategy

  • Priority to the development of a government benchmark yield curve

Active debt management -

derivatives and buy-backs

  • Interest rate and refinancing risk management

To fulfil the liquidity


To overcome market inefficiencies

To widen the investor base

Following best practices

The role of Financial Intermediaries



Main Actors

  • Concentration of the annual borrowing
  • needs in the OT
  • market
  • Development of primary market techniques
  • Fostering an efficient and liquid secondary market
  • Consolidation of an international and diversified base of investors

An internationalised and diversified investor base

  • Around 82% of the turnover* in the OT secondary market is generated by non-domestic investors

*Turnover with final investors reported by Primary Dealer (excluding intra-Primary Dealer trading) - 2006


Tel: +351 21 7923300

Fax: +351 21 7993795

Web site:

Reuters pages: IGCP01

Bloomberg pages: IGCP

Further information on the Portuguese economy can be obtained from:

Further information on the Portuguese secondary market can be obtained from:

Economic Research and Forecasting Department at the Ministry of Finance

Budget Department

National Statistics Office

Banco de Portugal (Central bank)

Reuters pages: PT/MTS1

MTS Portugal:



The information and opinions contained in this document have been compiled or arrived at from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates contained in this document are published for the assistance of recipients, but is not to be relied upon as authoritative or taken in substitution for the exercise or judgment by a recipient and, therefore, does not form the basis of any contract or commitment whatsoever. IGCP does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents.