"Fiscal consolidation has been a priority of economic policy" – The Economic Journal

"Fiscal consolidation has been a priority of economic policy" - The Economic Journal

The rating agency Standard & Poor's today upgraded the Portuguese public debt rating from BBB- / A-3 to BBB / A-2, two levels above the level of speculative investment, giving it a stable outlook. It is recalled that on September 15, 2017 S & P took Portugal out of rubbish by giving it a rating of BBB- (the worst of the ratings investment grade) and today has improved the rating.

"This decision reflects the recognition of important structural changes in the national economy and the improvement of public accounts. This is a decision that contributes to strengthening investor confidence and Portugal's external credibility, with a direct impact on the financing costs of households, companies and the State, "says the Ministry of Finance.

In the economic sphere, the process of rebalancing the external accounts and their re-composition, in a sense that gives it greater resilience, and the increase in the weight of exports in the Gross Domestic Product (GDP), by +16 percentage points since 2005, stand out.

"The agency believes that credit conditions in Portugal have converged towards the euro zone average, while at the same time a substantial decrease in corporate and household indebtedness," says Mário Centeno's office.

Today S & P put public credit in a position of quality investment asset, and put Portugal away from the club of the BBB- countries (where for example Romania and India), and pasted it to the club of the middle countries in terms of rating, as is the case in Italy.

"The process of fiscal consolidation has been a priority of economic policy and based on economic growth, reducing interest charges and containing expenditure," says the Centeno ministry.

S & P maintains its decision based on improved external accounts, aided by exports, but warns that public debt remains very high, even though it has fallen.

Already Centeno argues that "the primary budget surplus achieved in 2018 (estimated at about 3%, one of the largest OECD) puts the public debt ratio on a downward path."

"It is estimated that in 2019 the budget deficit will be reduced by 0.2 to 0.3 pp of GDP, which lends credibility to the future budgetary trajectory," he adds.

"The Portuguese economy is growing 22 quarters, in a process of convergence with the eurozone that has been in place since 2017 and is expected to continue in the coming years," he said.

The Government also says that GDP growth "has been accompanied by strong employment growth (320,000 new jobs have been created since the beginning of the legislature) and the reduction of unemployment (a reduction of 285,000 since the beginning of the legislature) in one scenario balance of external accounts ".

"The Portuguese Republic was financed this week with the lowest interest rates ever, in a scenario of convergence with the rates applied to Spain's public debt and the differential with Italy," they said.

The Government says that "Portugal has been taking a path that has allowed it to strengthen the resilience of the economy and public accounts, building solid foundations for balanced growth" and that "the results achieved are extremely important given the challenges ahead for the future, in a context of political uncertainty and deterioration of the global economic environment. "

"The Government is committed to preserving this path, considering it to be the best guarantee of sustainable growth, inclusive and creating quality employment," concludes the Ministry of Mário Centeno.

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