In 2021, the highest rates of government guarantees in the EU were recorded in Germany, Austria and Finland.
The most common form of contingent liabilities in the EU countries is government guarantees on the liabilities, and occasionally, on the assets of third parties. In 2020 and 2021, government guarantees provided in the EU increased notably, following the onset of the COVID-19 pandemic.
In 2021, the highest overall rate of government guarantees was recorded in Germany (17.3% of gross domestic product; GDP), Austria (17.0%), Finland (17.0%), Italy (16.0%) and France (15.2%). On the lower end of the scale, rates of less than 1% of GDP were recorded in Ireland, Bulgaria, Czechia and Slovakia.
This information comes from data on contingent liabilities and non-performing loans published by Eurostat today. This article presents a handful of findings from the more detailed Statistics Explained article.
Cyprus remained the country with the highest level of non-performing loans
In 2021, Cyprus remained the country with the highest stock of non-performing loans (assets) of the general government, at 20.2% of GDP. This was due to a large transaction in 2018, whereby non-performing loans from a Cypriot public financial corporation (classified outside government) were transferred to a government unit.
Three other EU Member States recorded a share higher than 1% of GDP: Slovenia (1.8%), Portugal (1.4 %) and Croatia (1.1 %). For a significant majority of EU Member States, non-performing loans decreased in 2021 compared with 2020. For Cyprus, Slovenia and Portugal, the majority of non-performing loans refer to loans of financial defeasance structures. In the case of Croatia, the figure mainly refers to the loans of a national development bank (classified inside general government).
Portugal and Slovakia with largest liabilities related to off-balance PPPs
In 2021, liabilities related to off-balance public-private partnerships (PPPs, long-term construction contracts where assets are recorded outside government accounts) were at or below 2 % of GDP in all EU countries. Portugal had the highest share (2.0 % of GDP), followed by Slovakia (1.5 %) and Hungary (0.9 %).
In both Portugal and Slovakia, the liabilities relate mainly to motorway projects. In many EU countries, off-balance PPPs were observed at the central government level. Only in a few countries, like Spain and Belgium, were they also related to state and local governments.
For more information:
- Statistics Explained article on contingent liabilities and non-performing loans
- Statistics 4 Beginners on government finance statistics
- Thematic section on government finance statistics
- Database on government finance statistics
Methodological notes:
- This article includes data on:
- contingent liabilities (potential liabilities) which may become actual government liabilities if some specific conditions prevail;
- government guarantees;
- liabilities related to public-private partnerships (PPPs) recorded off-government-balance-sheet;
- liabilities of government-controlled entities (public corporations) classified outside general government;
- government non-performing loans (NPLs, assets), which could imply a loss for the government if these loans are not repaid.
- Data on guarantees do not include:
- government guarantees issued within the guarantee mechanism under the Framework Agreement of the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM);
- derivative-type guarantees meeting the ESA 2010 definition of a financial derivative;
- deposit insurance guarantees and comparable schemes;
- government guarantees issued on events that are difficult to cover via commercial insurance (earthquakes, large-scale flooding, etc.).
- The data in this article refer to December 31, 2021 (with a few minor exceptions for liabilities of government-controlled entities classified outside general government). According to the decision of Eurostat from 2013, contingent liability data are reported by the EU Member States annually each December, with a typical time lag of T+12 months. The current article, therefore, occurs with a time lag of T+13 months.
- France and the Netherlands: 2020 instead of 2021 data on the level of liabilities of public corporations classified outside general government.
- Off-balance sheet PPPs data do not include the liabilities related to off-balance sheet concession contracts, as per the concession definition in Chapter 2 of the Guide to the Statistical Treatment of PPPs.
- Data on contingent liabilities and potential obligations of government are provided by the EU Member States in the context of the Enhanced Economic Governance package (the “six-pack”) adopted in 2011. In particular, Council Directive 2011/85 on requirements for budgetary frameworks of the Member States requires the Member States to publish relevant information on contingent liabilities with potentially large impacts on public budgets, including government guarantees, non-performing loans, and liabilities stemming from the operation of public corporations, including the extent thereof.
Contingent liabilities are not part of the general government (Maastricht) debt, as defined in the Council Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community.