Portuguese too skint to pay credit

The value of credit not paid to banks by Portuguese consumers – up until the end of last March - is around 3.89 million euros.

According to the bulletin by the Bank of Portugal, this means that almost 2.8 per cent of loads ceded by the banks are currently loans that consumers (i.e. Portuguese families) cannot afford.

Compared to figures for March 2009, credit won by private clients increased by 18 per cent – in all, around 600 million euros worth.

The situation is most worrying in the consumer area – where non-payment of loans has increased over the last two years, and has now reached its highest level since 1997, with around seven per cent of the value of loans given now classified as “risky credit”.

Experts predict the situation will only get worse with the increase in taxes and rising unemployment (currently running at 10.6 per cent).

Meantime, banks are more and more opting for debt collection agencies to recover bad debts, rather than wait for the snail’s pace of the courts.