"Despite the undeniable progress, there is no room for complacency" – The Economic Journal

There is a lack of a common deposit guarantee system in the Banking Union, stresses Carlos Costa - O Jornal Económico


The governor of the Bank of Portugal (BdP), Carlos Costa, said on Monday that despite the success of economic recovery in Portugal after the intervention of the troika, the country should continue to seek consensus to implement structural reforms.

Speaking at the opening of the conference "Portugal: reform and growth within the euro area", organized by the BOP and the International Monetary Fund (IMF) in Lisbon, Carlos Costa listed the progress in the Portuguese economy in recent years, , fiscal consolidation, the beginning of the downward trajectory of the public debt and the reduction of bad debt.

However, he warned that "despite the undeniable progress, there is no room for complacency."

"The history of the past 40 years teaches us that the initial impact of a financial assistance program will only be sustainable if there are structural changes that promote greater potential growth," he said.

Carlos Costa identified several challenges that justify the implementation of structural reforms in the current context, such as the strong global competition in the current context.

"We need a simple and efficient state, while being able to promote social cohesion at the same time," he said. He also stressed the need to transfer resources through the tradable sector is necessary to avoid a return to external imbalances, "but may compromise social cohesion". Still, "adapting the competition is always challenging and there are always losers in this process," he added.

It recognized, however, that in the absence of a sense of urgency and the impending pressure of the financial market, the consensus of political and social decision-makers becomes more difficult.

"The costs of each reform are made clearer and the resulting benefits must be carefully considered," he added.

"The nature of these challenges transcends purely economic models, encompassing social balance. Its overcoming therefore requires social and political consensus, only possible with an open, broad and informed debate, "he added.



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