GOVERNMENT DEBT: HIGHER LONG-TERM DEBT TO FINANCE DEFICITS.
Central governments took the lion's share of general government liabilities, ranging in 1998 from over 80% in France, the Netherlands and Spain to over 90% in the other countries. Luxembourg and Norway stood as the exceptions to this rule with local government taking a respective 35% and 32% of total debt. The low level of social security funds debt should be seen in relation to the fact that, in some countries, a part of this financing is realised through central government.A clear trend towards an increase in long-term debt is reported in the 1990s, except in Austria, Germany and Luxembourg, where it has long been very high (over 95%). The most significant changes occurred in Greece and Portugal. Their shares of short-term debt fell by 14 and 10 points respectively between 1995 and 1998. Short-term debt was limited in most countries, except the United Kingdom (24%), Sweden(21%), Italy and Spain (19%) and Portugal (18%).Bonds dominate.Long-term bonds were the favourite instrument. According to the survey, long-term bonds, especially those issued in fungible tranches, have increasingly been the instrument favoured by EU Member States to finance their government liabilities: Denmark (92%) and Finland (84%) had the highest share of long term bonds in 1998. For most other Member States, such bonds took more than 70% of government debt. At the other end of the scale, long-term bonds only represented 54% in Germany, 56% in Norway and 58% in Luxembourg.Turning to secondary sources of government financing, the survey highlights significant differences among Member States: the UK (19%) and Portugal (14%) relied mostly on deposits (saving certificates), banking credits represented about 40% and above for Luxembourg and Germany, bills and short-term bonds took more than 10% in Belgium, Italy and Norway and about 20% in Spain and Sweden.Resident creditors.In all Member States for which figures are available, the debt was mainly held by resident creditors. In 1998, their share was between 52% in Sweden and more than 80% in France, the Netherlands and the United Kingdom. Finland and Denmark were the only EU countries where most government debt was held by non-resident creditors (60 and 53% respectively). Italy had the lion's share of government debt held by households (27%).