Former programme countries
Ireland (EFSF)
The Irish economy continued to grow in 2020 despite the Covid-19 pandemic. Strong exports offset the sharp decrease in domestic demand. Exceptional pandemic-related expenditures caused a sizeable general government deficit. Very favourable market access conditions allowed Ireland to maintain sizeable end-year cash buffers. Irish banks proved resilient to the pandemic shock despite weak profitability. Read more…
Greece (EFSF and ESM)
The pandemic interrupted a three-year economic recovery and led to a sizeable general government deficit for the first time since 2015. GDP fell sharply, mainly stemming from the drop in tourism and the measures to contain the spread of Covid-19. The recession and tailored aid measures pushed the budget into large deficits. Favourable market conditions, supported by the European Central Bank programmes and the Next Generation EU recovery plan, enabled the country to cover the elevated financing needs and maintain high cash balances. Greek banks have so far weathered the impact of the pandemic and provided an increasing amount of loans to firms, largely thanks to supervisory flexibility and national support schemes. Read more…
Spain (ESM)
Spain was hard hit by the Covid-19 pandemic, causing substantial increases in the budget deficit and debt ratios. The Spanish Treasury nonetheless maintained very favourable market access throughout 2020, which allowed funding costs to reach new historic lows. Spanish banks’ profitability was negatively affected by the pandemic, but benefitted from supervisory and government support measures and from balance sheet strength gained over the last decade. Read more…
Cyprus (ESM)
Cyprus’ economy shrank in 2020 due to the pandemic, albeit by less than the euro area average and with only a moderate rise in the unemployment rate. Though public debt and government financing needs increased significantly, Cyprus enjoyed favourable financing conditions and maintained a large liquidity buffer. Decreasing, although still high, NPLs and the loan payment moratoria limited the pandemic’s drag on banks’ balance sheets. Structural reforms in several areas would help to boost the country’s longer-term growth potential. Read more…
Portugal (EFSF)
The Covid-19 pandemic and the ensuing containment measures undermined private consumption and investment, leading to a sharp economic contraction in 2020. The trade deficit widened as imports outstripped exports. Automatic stabilisers and the discretionary pandemic-related fiscal effort produced a substantial deficit in 2020. Bond market liquidity remained adequate, and volatility decreased. Market access conditions remained very favourable and bond yields declined owing to strong European Central Bank support. The pandemic has halted the banking sector’s recovery and dampened profitability metrics, although the loan moratoria have served as a buffer. Read more…