Ricardo Mourinho Félix: “A 120% debt to GDP is manageable”

  • ECO News
  • 20 October 2017

The secretary of state Assistant and of Finance acknowledges Portugal still has a high debt, but believes it is "manageable". On the deficit, he believes the reduction should not be accelerated.

Ricardo Mourinho Félix believes a “120% debt to GDP is manageable”. Although he acknowledges the level is still high, the secretary of state Assistant and of Finance believes what rating agencies want is for debt to decrease “in a sustainable manner”; the same goes to the deficit, where past mistakes should not be repeated in order to speeding its reduction, Mourinho Félix states. He also states Portugal will continue repaying the IMF, without jeopardizing its financial cushion.

“The debt size is still large. Of course it would be better to face external risks with a 60% debt than with 120%. But, although it is a high level, it is manageable”, the State secretary says. “After a 131% debt to GDP in 2016, we foresee, in the Budget, a 126.2% this year and 123.5% next year. This rhythm needs to be maintained, which means we will have to maintain or primary balances during that period”, he adds, in the interview to Jornal Económico.

The debt size is still large. Of course it would be better to face external risks with a 60% debt than with 120%. But, although it is a high level, it is manageable.

Ricardo Mourinho Félix

Secretary of State and of Finance

Following S&P’s rating improvement, Mourinho Félix considers that the most important thing for a rating agency “is to see a country’s debt decrease in a sustainable manner and see that country following a trajectory that will be maintained”. The secretary of State believes a sustainable decrease should also be maintained for the deficit, adding that accelerating that reduction would be a mistake.

Ricardo Mourinho Félix highlights that the strategy of having a financial cushion in case any of any extraordinary event “will continue next year and until the end of the mandate”. He added: “Right now, we have a liquidity buffer of 50% of our financing needs for the next 12 months”.

The State secretary also says that payments to the International Monetary Fund (IMF) will continue, without jeopardizing this security margin. “Considering the budgetary execution, it is possible that we can make an additional payment to IMF this year; we are assessing that possibility”. After the 5.2 billion euros’ reimbursements by August, the Government hopes to return another three billion euros to IMF until the end of this year, according to the 2018 State Budget draft.

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