22 December 2020

2020- n° 332

At the end of Q3 2020, the Maastricht debt accounted for €2,674.3 billion Debt of the general government according to the Maastricht definition - third quarter 2020

At the end of Q3 2020, Maastricht’s debt reached €2,674.3 billion, it accounted for 116.4 % of gross domestic product (GDP). After the unprecedent increase in public debt in second quarter 2020 (+€199.9 billion), the variation of the third quarter (+€36.1 billion) is similar to the one of the third quarter 2019 (+€39.6 billion). Net public debt increased more moderately (+€18.8 billion) due to an increase in the cash position of the State and social security funds (+€15.1 billion after +€93.9 billion in previous quarter). The level of cash flow of public administrations remains high and is justified by future financing needs linked in particular to partial activity schemes and solidarity funds. Net public debt stood at 101.7% of GDP.

In the third quarter of 2020, the State’s contribution to debt increased by €35.7 billion. The State financed a budget execution deficit of €36.7 billion, an amount close to the bugdet deficit recorded in the third quarter of 2019 (€31.7 billion). The increase in the State's debt was accompanied by a €11.6 billion increase in cash and cash equivalents. This increase in cash position is due in part to issue premiums of €10.0 billion this quarter resulting from very advantageous borrowing conditions. These premiums are not included in debt within the meaning of Maastricht. The State's debt increased mainly in the form of negotiable long-term debt (up €37.2 billion) while it reduced its outstanding short-term negotiable debt (-€2.4bn).

The contribution of local government to the public debt increased to a lesser extent (€+0.2 billion) mainly due to the increase in regions’ debt (+€1.1 billion) while municipalities paid off their debt (-€0.8 billion).

Social security funds debt was virtually stable (+€0.4 billion), after an increase of €84.9 billion in second quarter. On the one hand, some organisations increased their debt, such as CNAF, which increased its short-term loans by €0.6 billion, and Cades, which took on €2.2 billion in debt, after €7.6 billion in the previous quarter. Cades' indebtedness is intended in particular to finance CNAM and the Fonds de solidarité vieilesse in the second half of 2020. On the other hand, Acoss decreased its debt (-€1.6 billion), as did hospitals and Unédic (by €0.4bn and €0.3bn respectively). The cash position of all social security administrations increased by €3.8 billion due to the increase in Acoss' cash position (€4.6 billion), while FRR's cash position decreased (€1.7 billion).

The contribution of central agencies to the debt diminished (€−0.2 billion), after a €1.1 billion decrease in Q2. SNCF Réseau reduced its long-term debt by €0.3 billion.

The net public debt reached €2,335.6 billion, a €18.8 billion increase (equivalent to 101.7% of GDP versus 100.3 % the previous quarter). The €17.3 billion gap between changes in net and gross debt mainly reflects an increase in the cash position of the State and social security funds (respectively €+11.6 billion and +€3.8 billion this quarter, after respectively +€69.9 billion and +€23.6 billion in previous quarter). As part of the strategic investments of the recovery plan, the State is buying €1.0 billion of green bonds issued by EDF in order to increase its renewable energy production capacity by 2030 (bonds known as OCEANEs Vertes).

In Q3 2020, the overall value of quoted shares and undertaking for collective investment schemes (UCIs) held by general government units went down by €4.9 billion to €239.9 billion after reaching €244.8 billion. This decline was mainly due to the sale of mutual fund shares by Unédic and Caisse nationale d'assurance vieillesse des professions libérales (respectively -€3.4bn and -€0.5bn) while the value of listed shares stagnated.