Washington, United States, 18 July – Portugal ahs been living above its means for many years, obtaining funding from the rest of the world via the banking system, increasing its foreign debt, the International Monetary Fund (IMF) said Thursday.
In a report on the Portuguese economy, the IMF warned that “despite being part of European Monetary Union changing the nature of foreign restrictions, it does not eliminate them and the accumulation of net foreign debt cannot continue indefinitely.”
“Therefore the resolution of this fundamental problem requires adjustments and greater savings by all sectors of the economy. If productivity cannot be increased, the costs of adjustment will fall on consumption and investment. Policies should promote this adjustment, preventing potentially more adverse scenarios.”
The report said that more fragile world conditions should, therefore, not be a reason for making use of “artificial solutions” but rather serve to boost efforts to re-launch the convergence process, which has meanwhile stagnated.”
The IMF recommends that Portugal, “continue with budgetary consolidation and reform, maintain the robustness of the financial sector, increase the economy’s potential offering and improve competitiveness.” (macauhub)