Portugal's 2014 budget deficit rises sharply after loan to troubled bank is included

MarketsAssociated Press

Portugal's statistics agency has revised sharply upward the country's 2014 budget deficit, from 4.5 percent to 7.2 percent, after the Treasury failed to recoup a loan it made to a bank.

The government placed 4.9 billion euros ($5.5 billion) in a bank resolution fund — a mechanism adopted during the eurozone debt crisis to support the financial sector — that kept Novo Banco afloat. Novo Banco was the so-called good bank salvaged from last year's collapse of major lender Banco Espirito Santo.

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The Bank of Portugal announced this month it had failed to find a buyer for Novo Banco willing to pay the sale price, which aimed to cover public liabilities.

The National Statistics Agency added the Treasury outlay to the deficit Wednesday.