Carlos Costa: “Portuguese companies stand among the most leveraged in Europe”
The Portuguese society wants a higher level of well-being than what economy can provide, warns Carlos Costa, governor of the Bank of Portugal, in an opinion article in Público.
“Portuguese companies stand among the most leveraged in Europe” — the warning was made by Carlos Costa, governor of the Bank of Portugal. In an opinion article published by the Portuguese newspaper Público this Tuesday, the governor highlights that the Portuguese society wants more than what the economy can provide right now, adding that companies’ indebtedness is an issue that must be solved “urgently”.
“We know that current wishes for individual well-being and collective equity in the Portuguese society exceed the economy’s ability to produce”, the governor highlights. Carlos Costa recalls that the potential growth is now “at very low levels” (between 0% and 2%). This means that a set of challenges need to be solved before “citizens’ aspirations in terms of income” are able to meet the production of the Portuguese economy.
"It is urgent that companies reinforce their equity capital, whether by means of current shareholders and/or by having new shareholders.”
Companies need to reinforce their financial autonomy and to qualify their management. “It is urgent that companies reinforce their equity capital, whether by means of current shareholders and/or by having new shareholders”, Carlos Costa assured. “It is a key term for increasing productive investment, mainly in the tradable goods’ sector”, he stated. And if it is needed, companies should consider alternatives such as “converting debt in capital or quasi-equity and attracting foreign capital”.
As for public agents, they should adopt measures that “promote a productive investment and the qualification of human resources”. In addition, they should adopt a “legal and institutional framework that enables a more efficient use of the resources that are available”.
