Less austerity in Portugal requires taking on more debt

15 January 2016

The slowdown in fiscal consolidation applied by the new Portuguese government will require taking on a further 11 billion euros in debt by 2019, according to the Technical Unit for Budget Support (UTAO) in a report sent to Parliament.

The document said that in order to reduce fiscal deficits between 2016 and 2019, the state will have to contract debt in the amount of 17.1 billion euros, representing an increase of 10.9 billion euros compared to plans made public four months ago, which pointed to 6.2 billion euros.

Instead of the expected budget deficit of 1.8 percent of GDP at the end of this year, the Socialist government points to a slide of 2.8 percent in the accounts, an amount that requires Portugal to increase debt levels by around 2 billion euros.

The UTAO pointed out that “the state budget deficit shall be set at 5 billion euros, 3.8 billion euros and 3.1 billion euros in 2017, 2018 and 2019 respectively,” which is “an upward review compared to the latest forecast” communicated to investors in September by the Management Agency of the Treasury and Public Debt (IGCP). (macauhub/PT)