“Portugal has done all the fiscal consolidation it had to do”

Mariana Mortágua, Left Block deputy, considers that Portugal has done everything it had to do in terms of fiscal consolidation. In an interview to ECO, the deputy speaks of the Portuguese debt, as well as Standard & Poor’s (S&P) decision of removing Portugal from the junk status.

Mariana Mortágua believes the deficit is already “too low”, considering the capital that needs to be injected in public services such as Health and Education, to remove them from austerity. The deputy states that “in order to have a 1% deficit, Portugal has a primary balance that is fully consumed in public debt”. She also adds: “From the point of view of stability and public finance, Portugal has done all the fiscal consolidation it had to do, and it has a very low deficit — too low, in fact”.

But the economist acknowledges that a debt over 130% of GDP (almost 250 billion euros) scares her, although she believes that cutting back on the deficit will not be the solution for Portugal’s problem: “We can have a 1% deficit and continue to have 4%, 3% or 2% primary balance, which means that every year, the State has to provide profit exclusively to pay our debt to foreign creditors”. That is why Mariana Mortágua states the Left Block “has advocated that a debt restructuring is the best measure to relief the pressure on a country”.

Concerning S&P’s decision to remove the Portuguese debt from the junk status, Mariana Mortágua doubts there is a “connection” between a country’s performance and that decision made by agencies. However, she states this was good news, which only arrived when the Portuguese economy grew. “Being out of the junk status has very positive and important consequences for the country, but we cannot forget the role of these rating agencies and how they have been discredited in the past“, while also mentioning that many times, decisions were made “based on political considerations, instead of economical”. She concluded by stating: “This decision is the acknowledgement of how an economy improves when austerity measures end”.