Portugal gold reserves could cut its bailout
(5 May 2011 – Europe) Debt-laden Portugal could cut its bailout from the European Union by one fifth – if the county dips into its US$20.7 billion (A$18.9 billion) gold reserves.
Portugal, Greece and Spain all have large central bank gold reserves that have not been tapped, despite their precarious financial situations.
Portugal has one of the biggest gold stashes in Europe with 382.5 tonnes, its gold reserves equal 9 percent of GDP, the highest of any European country.
This month Portugal agreed a bailout from the European Union worth up to E$80 billion (A$108.4 billion) as it struggles with debt equivalent to 92.9 percent of GDP. It became the third country after Greece and Ireland to seek a bailout.
ING Bank chief international economist Rob Carnell said that if assets are factored into measures of debt, mobilising the resources could improve the position of these countries significantly.
Most measures of a country's debt ignore the value of gold holdings, but the scale of reserves held by Portugal, Spain and Greece has called into question whether they should be utilised to ease their debt crisis.
Portugal's unusually large gold reserves were built up by the former dictator Antonio de Oliveira Salazar during his 36 years in power.
He diverted earnings from exports into gold particularly during World War II, when Portugal is believed to have received large amounts of gold from the Nazis.
Many of Europe's central banks have been sellers of their gold reserves in the past 20 years as the metal lost its attraction as a reserve asset.
Portugal has one of the biggest gold stashes in Europe with 382.5 tonnes, its gold reserves equal 9 percent of GDP, the highest of any European country.
This month Portugal agreed a bailout from the European Union worth up to E$80 billion (A$108.4 billion) as it struggles with debt equivalent to 92.9 percent of GDP. It became the third country after Greece and Ireland to seek a bailout.
ING Bank chief international economist Rob Carnell said that if assets are factored into measures of debt, mobilising the resources could improve the position of these countries significantly.
Most measures of a country's debt ignore the value of gold holdings, but the scale of reserves held by Portugal, Spain and Greece has called into question whether they should be utilised to ease their debt crisis.
Portugal's unusually large gold reserves were built up by the former dictator Antonio de Oliveira Salazar during his 36 years in power.
He diverted earnings from exports into gold particularly during World War II, when Portugal is believed to have received large amounts of gold from the Nazis.
Many of Europe's central banks have been sellers of their gold reserves in the past 20 years as the metal lost its attraction as a reserve asset.
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