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53-689: Aníbal António Cavaco Silva was born in Boliqueime , Loulé , Algarve . He was initially an undistinguished student. As a 12-year-old, he flunked at the 3rd grade of the Commercial School, and his grandfather put him working on the farm as a punishment. After returning to school, Cavaco Silva went on to become an accomplished student. Cavaco Silva then went to Lisbon , where he took a vocational education course in accounting from Instituto Comercial de Lisboa ( Instituto Superior de Contabilidade e Administração de Lisboa (ISCAL), today) in 1959. In parallel, he

106-531: A "debt brake" in Germany and Switzerland ; and the European Union 's Stability and Growth Pact agreement to maintain a general government gross debt of no more than 60% of GDP. The ability of government to issue debt has been central to state formation and to state building . Public debt has been linked to the rise of democracy , private financial markets , and modern economic growth . For example, in

159-498: A general rule, the GFSM says debt should be valued at market value , the value at which the asset could be exchanged for cash. However, the nominal value is useful for a debt-issuing government, as it is the amount that the debtor owes to the creditor. If market and nominal values are not available, face value (the undiscounted amount of principal to be repaid at maturity) is used. A country's general government debt-to-GDP ratio

212-473: A government would need to raise taxes or reduce spending, which would exacerbate the negative event. While government borrowing may be desirable at times, a "deficits bias" can arise when there is disagreement among groups in society over government spending. To counter deficit bias, many countries have adopted balanced budget rules or restrictions on government debt. Examples include the "debt anchor" in Sweden;

265-406: A government's balance sheet , but they are not included in government debt because they are not contractual obligations. Indeed, it is not uncommon for governments to change unilaterally the benefit structure of social security schemes, for example (e.g., by changing the circumstances under which the benefits become payable, or the amount of the benefit). In the U.S. and in many countries, there

318-588: A motion of no confidence, and the president appointed António Costa, the leader of the Socialists, as prime minister in his place. Cavaco Silva married Maria Alves da Silva at the Church of the Monastery of São Vicente de Fora , São Vicente de Fora, Lisbon, on 20 October 1963. The couple had a daughter Patricia, and a son Bruno. He has five grandchildren, four of whom were born to his daughter. One of them, António Montez ,

371-601: A rising interest rate, which can crowd out private investment as governments compete with private firms for limited investment funds. Some evidence suggests growth rates are lower for countries with government debt greater than around 80 percent of GDP. A World Bank Group report that analyzed debt levels of 100 developed and developing countries from 1980 to 2008 found that debt-to-GDP ratios above 77% for developed countries (64% for developing countries) reduced future annual economic growth by 0.017 (0.02 for developing countries) percentage points for each percentage point of debt above

424-472: A safe and liquid investment, it could be used as collateral for private loans. This created a complementarity between the development of public debt markets and private financial markets. Government borrowing to finance public goods, such as urban infrastructure, has been associated with modern economic growth . Written records point to public borrowing as long as two thousand years ago when Greek city-states such as Syracuse borrowed from their citizens. But

477-426: Is a Portuguese village and freguesia ("civil parish"), located in the municipality of Loulé , in the region of Algarve . The population in 2011 was 4,973, in an area of 46.21 km². The urbanized core of the village is about 50 m to 95 m above sea level. Located in central Algarve, 27 km from Faro International Airport it is a well preserved small village less than 20 minutes away from both

530-583: Is a professional footballer. His brother, Rogério Cavaco Silva, is a businessman and a victim of the Dominion of Melchizedek scam. Source: Source: Cavaco Silva made state visits to countries in Europe, Africa, Asia and the Americas. In September 2006, on his first state visit, he visited Portugal's neighbour, Spain. Boliqueime Boliqueime ( European Portuguese pronunciation: [buliˈkɐjmɨ] )

583-668: Is also the president of the Portuguese Council of State . Cavaco Silva's term was initially marked by a mutual understanding with the government led by Socialist José Sócrates , which he referred to as "strategic co-operation". The most controversial moment of his presidency was when the Assembly of the Republic passed a bill for the holding of a pre-legislative referendum on the legalization of abortion in Portugal without any restrictions in

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636-414: Is an indicator of its debt burden since GDP measures the value of goods and services produced by an economy during a period (usually a year). As well, debt measured as a percentage of GDP facilitates comparisons across countries of different size. The OECD views the general government debt-to-GDP ratio as a key indicator of the sustainability of government finance. An important reason governments borrow

689-458: Is because the beneficiaries of the government's expenditure on goods and services when the debt is created typically differ from the individuals responsible for repaying the debt in the future. An alternative view of government debt, sometimes called the Ricardian equivalence proposition, is that government debt has no impact on the economy if individuals are altruistic and internalize the impact of

742-460: Is issued in a country's own fiat money , it is sometimes considered risk free because the debt and interest can be repaid by money creation . However, not all governments issue their own currency. Examples include sub-national governments, like municipal, provincial, and state governments; and countries in the eurozone . In the Greek government-debt crisis , one proposed solution was for Greece to leave

795-432: Is no money earmarked for future social insurance payments — the system is called a pay-as-you-go scheme. According to the 2018 annual reports from the trustees for the U.S. Social Security and Medicare trust funds, Medicare is facing a $ 37 trillion unfunded liability over the next 75 years, and Social Security is facing a $ 13 trillion unfunded liability over the same time frame. Neither of these amounts are included in

848-413: Is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits . A deficit occurs when a government's expenditures exceed revenues. Government debt may be owed to domestic residents, as well as to foreign residents. If owed to foreign residents, that quantity is included in the country's external debt . In 2020,

901-408: Is to act as an economic "shock absorber". For example, deficit financing can be used to maintain government services during a recession when tax revenues fall and expenses rise for say unemployment benefits. Government debt created to cover costs from major shock events can be particularly beneficial. Such events would include In the absence of debt financing, when revenues decline during a downturn,

954-676: Is to say forces that campaigned to abrogate the Lisbon Treaty, the Fiscal Compact, the Growth and Stability Pact, as well as to dismantle monetary union and take Portugal out of the euro, in addition to wanting the dissolution of NATO. António Costa , leader of the Socialist Party, called this a grave mistake and added "It is unacceptable to usurp the exclusive powers of parliament. The Socialists will not take lessons from Professor Cavaco Silva on

1007-636: The Catholic University of Portugal (1975), extraordinary professor at the New University of Lisbon (1979) and finally director of the Office of Studies of the Bank of Portugal . Cavaco Silva has published several academic works in economics, including in subfields like monetary policy and monetary unions . He received an Honorary Doctorate from Scotland's Heriot-Watt University in 2009. Cavaco Silva joined

1060-637: The European Community . In 1987, the PRD withdrew its tacit support, and a parliamentary vote of no confidence forced President Mário Soares to call an early election . Cavaco Silva's Social Democrats captured 50.2 percent of the popular vote and 148 of the 250 seats in the legislature. Far behind were the Socialists, with only 60 seats, and the Communists, with 31. The CDS and the PRD were virtually wiped out, left with only four and seven seats, respectively. This

1113-499: The Latin American debt crisis of the early 1980s, and Argentina's debt crisis in 2001 . To help avoid a crisis, governments may want to maintain a "fiscal breathing space". Historical experience shows that room to double the level of government debt when needed is an approximate guide. Government debt is built up by borrowing when expenditure exceeds revenue, so government debt generally creates an intergenerational transfer. This

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1166-663: The Social Democratic Party in 1974 and became the party leader in 1985. The 1985 legislative election was complicated by the arrival of a new political party, the Democratic Renewal Party (PRD), which had been formed by the supporters of the President , António Ramalho Eanes . In the 250-member Assembly of the Republic , the nation's legislature, the PRD won 45 seats – at the expense of every party except Cavaco Silva's PSD. Despite winning less than 30 percent of

1219-495: The 10 first weeks of pregnancy. After the parliamentary approval of the bill summoning the referendum, Cavaco Silva referred the matter to the Portuguese Constitutional Court, which declared both the proposed legalization and the referendum constitutional by a narrow 7-6 margin. Cavaco Silva, who could still have vetoed the referendum bill, decided to sign it into law, and thus allowed the referendum. The majority of

1272-491: The 17th and 18th centuries England established a parliament that included creditors, as part of a larger coalition, whose authorization had to be secured for the country to borrow or raise taxes. This institution improved England's ability to borrow because lenders were more willing to hold the debt of a state with democratic institutions that would support debt repayment, versus a state where the monarch could not be compelled to repay debt. As public debt came to be recognized as

1325-486: The 1920s Weimar Germany suffered from hyperinflation when the government used money creation to pay off the national debt following World War I . While U.S. Treasury bonds denominated in U.S. dollars may be considered risk-free to an American purchaser, a foreign investor bears the risk of a fall in the value of the U.S. dollar relative to their home currency. A government can issue debt in foreign currency to eliminate exchange rate risk for foreign lenders, but that means

1378-559: The 1970s , a bailout came from New York State and the United States national government. U.S. state and local government debt is substantial — in 2016 their debt amounted to $ 3 trillion, plus another $ 5 trillion in unfunded liabilities. A country that issues its own currency may be at low risk of default in local currency, but if a central bank provides finance by buying government bonds (sometimes referred to as debt monetization ), this can lead to price inflation . In an extreme case, in

1431-473: The 2006 presidential election. He was elected President of the Republic on 22 January 2006 with 50.6% of votes cast, avoiding a run-off. He is the first elected center-right president in Portugal since 1974. He is also the second former prime minister to be elected president, after Mário Soares . He was sworn in on 9 March 2006, becoming the Portugal’s first right-of-centre head of state in three decades. He

1484-685: The Portuguese economy. In the 1991 election Cavaco Silva's party had a majority even larger (50.6 percent) than the one of four years earlier. He decided not to contest the 1995 election , and the PSD, lacking a leader of his stature, lost 48 seats and the election. Cavaco Silva contested the 1996 presidential election , but was defeated by the Mayor of Lisbon , Jorge Sampaio , the Socialist candidate. Retiring from politics, he served for several years as an advisor to

1537-472: The Portuguese electorate abstained from the referendum, but the vote for legalization prevailed among those who chose to cast their ballot. Cavaco Silva was reelected president of Portugal on 23 January 2011 with 52,92% of the vote, and he took office for his second five-year term on 9 March 2011. At the general election on 4 October 2015 to the Assembly of the Republic , the unicameral Portuguese parliament,

1590-658: The United Kingdom (£628,978,782); on a per-capita basis, the highest-debt countries were New Zealand (£58 12s. per person), the Australian colonies (£52 13s.) and Portugal (£35). In 2018, global government debt reached the equivalent of $ 66 trillion, or about 80% of global GDP, and by 2020, global government debt reached $ 87US trillion, or 99% of global GDP. The COVID-19 pandemic caused public debt to soar in 2020, particularly in advanced economies that put in place sweeping fiscal measures. Government debt accumulation may lead to

1643-668: The board of the Banco de Portugal (Bank of Portugal), but retired from this position in 2004. He then became a full professor at the School of Economics and Management of the Catholic University of Portugal , where he taught the undergraduate and MBA programs. He is a member of the Club of Madrid and an honorary member of the International Raoul Wallenberg Foundation . On 20 October 2005, Cavaco Silva announced his candidacy for

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1696-413: The borrowing government then bears the exchange rate risk. Also, by issuing debt in foreign currency, a country cannot erode the value of the debt by means of inflation. Almost 70% of all debt in a sample of developing countries from 1979 through 2006 was denominated in U.S. dollars. Most governments have contingent liabilities , which are obligations that do not arise unless a particular event occurs in

1749-458: The debt on future generations. According to this proposition, while the quantity of government purchases affects the economy, debt financing will have the same impact as tax financing because with debt financing individuals will anticipate the future taxes needed to repay the debt, and so increase their saving and bequests by the amount of government debt. Such higher individual saving means, for example, that private consumption falls one-for-one with

1802-440: The defence of our democracy." The Green politician Rui Tavares commented "The president has created a constitutional crisis. He is saying that he will never allow the formation of a government containing Leftists and Communists. People are amazed by what has happened." The opposition parties quickly announced their intention of bringing down the new government in a motion of rejection. Eventually, Passos Coelho's government fell on

1855-458: The end of the Napoleonic Wars , British government debt reached a peak of more than 200% of GDP, nearly 887 million pounds sterling. The debt was paid off over 90 years by running primary budget surpluses (that is, revenues were greater than spending after payment of interest). In 1900, the country with the most total debt was France (£1,086,215,525), followed by Russia (£656,000,000) then

1908-455: The eurozone and go back to issuing the drachma (although this would have addressed only future debt issuance, leaving substantial existing debt denominated in what would then be a foreign currency). Debt of a sub-national government is generally viewed as less risky for a lender if it is explicitly or implicitly guaranteed by a regional or national level of government. When New York City declined into what would have been bankrupt status during

1961-407: The first chance to form a new government. Passos Coelho was unable to find any new partners and was widely expected to stand down, but on 22 October Cavaco Silva invited him to form a new government, even if it were a minority government. On 24 October Cavaco Silva explained his thinking: In 40 years of democracy, no government in Portugal has ever depended on the support of anti-European forces, that

2014-620: The founding of the Bank of England in 1694 revolutionised public finance and put an end to defaults such as the Great Stop of the Exchequer of 1672, when Charles II had suspended payments on his bills. From then on, the British Government would never fail to repay its creditors. In the following centuries, other countries in Europe and later around the world adopted similar financial institutions to manage their government debt. In 1815, at

2067-541: The future. An example of an explicit contingent liability is a public sector loan guarantee, where the government is required to make payments only if the debtor defaults. Examples of implicit contingent liabilities include ensuring the payment of future social security pension benefits, covering the obligations of subnational governments in the event of a default, and spending for natural disaster relief. Explicit contingent liabilities and net implicit social security obligations should be included as memorandum items to

2120-410: The general government sector is the total liabilities that are debt instruments. An alternative debt measure is net debt , which is gross debt minus financial assets in the form of debt instruments. Net debt estimates are not always available since some government assets may be difficult to value, such as loans made at concessional rates. Debt can be measured at market value or nominal value . As

2173-417: The inland city of Loulé, the seat of the municipality, and the coastal settlements of Vilamoura , a famed resort with marina , and Albufeira , a city by the sea with some of the most popular beaches in the region. This Faro location article is a stub . You can help Misplaced Pages by expanding it . Public debt A country's gross government debt (also called public debt or sovereign debt )

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2226-675: The level of government responsible for programs (for example, health care) differs across countries and the general government comprises central, state, provincial, regional, local governments, and social security funds. The debt of public corporations (such as post offices that provide goods or services on a market basis) is not included in general government debt, following the International Monetary Fund 's Government Finance Statistics Manual 2014 ( GFSM ), which describes recommended methodologies for compiling debt statistics to ensure international comparability. The gross debt of

2279-456: The popular vote, the PSD was the only traditional political party not to suffer substantial losses. Its 88 seats, in fact, represented a gain of 13 over the previous election. Accordingly, Cavaco Silva became prime minister on 6 November 1985. Cavaco Silva headed a minority government. On most issues, his Social Democrats could rely on the 22 votes of the Social and Democratic Center Party (CDS), but

2332-402: The right-wing government of Prime Minister Pedro Passos Coelho lost its majority, with center-left and far-left opposition parties gaining more than half of the seats. As Passos Coelho's own Social Democratic Party remained the largest in parliament, and still had the support of the much smaller CDS – People's Party , Cavaco Silva allowed Passos Coelho to continue as prime minister, giving him

2385-653: The rise in government debt, so the interest rate would not rise and private investment is not crowded out. Historically, there have been many cases where governments have defaulted on their debts, including Spain in the 16th and 17th centuries, which nullified its government debt several times; the Confederate States of America , whose debt was not repaid after the American Civil War ; and revolutionary Russia after 1917, which refused to accept responsibility for Imperial Russia's foreign debt. If government debt

2438-576: The rise of democracy , private financial markets , and modern economic growth . Government debt is typically measured as the gross debt of the general government sector that is in the form of liabilities that are debt instruments. A debt instrument is a financial claim that requires payment of interest and/or principal by the debtor to the creditor in the future. Examples include debt securities (such as bonds and bills), loans, and government employee pension obligations. International comparisons usually focus on general government debt because

2491-552: The threshold. Excessive debt levels may make governments more vulnerable to a debt crisis , where a country is unable to make payments on its debt, and it cannot borrow more. Crises can be costly, particularly if a debt crisis is combined with a financial/banking crisis which leads to economy-wide deleveraging . As firms sell assets to pay off debt, asset prices fall which risks an even greater fall in incomes, further depressing tax revenue and requiring governments to drastically cut government services. Examples of debt crises include

2544-496: The two parties' combined 110 votes fell 16 short of a parliamentary majority. The Socialists and Communists held 57 and 38 seats respectively; Cavaco Silva could govern if the 45 members of the PRD, who held the balance of power, abstained. According to a contemporary report in The New York Times , Cavaco Silva's first government presided over an "economic boom". The article described him as "pro-American" and committed to

2597-650: The value of government debt worldwide was $ 87.4 US trillion, or 99% measured as a share of gross domestic product (GDP). Government debt accounted for almost 40% of all debt (which includes corporate and household debt), the highest share since the 1960s. The rise in government debt since 2007 is largely attributable to stimulus measures during the Great Recession , and the COVID-19 recession . The ability of government to issue debt has been central to state formation and to state building . Public debt has been linked to

2650-412: Was a much lower increase than that which took place in the following years until 2011 marked by irrational and unsustainable State employment, from 1988 to 1993, during the government cabinets led by Cavaco Silva, the Portuguese economy was radically changed. As a result, there was a sharp and rapid decrease in the output of tradable goods and a rise of the importance of the non-tradable goods sector in

2703-639: Was admitted for university education at the Instituto Superior de Ciências Económicas e Financeiras de Lisboa (ISCEF) of the Technical University of Lisbon (UTL) (currently the Instituto Superior de Economia e Gestão (ISEG) of the University of Lisbon), and obtained in 1964, with distinction, a degree in economics and finance (he scored a mark of 16 out of 20). While studying in Lisbon, Cavaco Silva

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2756-768: Was an athlete of CDUL athletics department from 1958 to 1963. Between 1963 and 1964, he was drafted into the Portuguese Army Artillery for compulsory 11 month military service, serving in a battalion in Lourenço Marques in Portuguese Mozambique . Cavaco Silva studied a graduate course at the University of York in England. Returning to Portugal, he took up a post as assistant professor in ISCEF (1974), professor at

2809-420: Was the first time since the 1974 revolution that a single party had won an outright majority in the national parliament. At the time, it was also the largest majority that a Portuguese party had ever won in a free election. Although the occurrence of economic growth and a public debt relatively well-contained as a result of the number of civil servants was increased from 485,368 in 1988 to 509,732 in 1991, which

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