Public debt falls to 116.2% next year

  • ECO News
  • 16 October 2019

The Portuguese government had already revised upwards the target to 119.3% of GDP for this year, against the 118.6% registered in the Stability Programme.

The Government expects Portuguese public debt to reach 119.3% of Gross Domestic Product (GDP) this year and 116.2% next year. The data are included in the draft State Budget for 2020 sent this Tuesday by the Government to the European Commission represents an upward revision from previous targets. Even so, the Executive maintains the commitment to reduce indebtedness to close to 100% at the end of the legislature.

In September, when it sent the excessive deficit report to Brussels, the Government had already revised upwards the target to 119.3% of GDP for this year, which compares with the 118.6% registered in the Stability Program. This update also led the government to change the target for next year: instead of 115.2%, it now foresees 116.2%, according to the Draft Budget Plan released this Wednesday.

Since the beginning of August, the upward revision of the public debt target was expected as Eurostat decided to change the method of calculating the debt stock. Among other points, it started to account for interest payable on savings certificates in public debt. At the time, the Government recalled that this was a purely statistical change, i.e., there were no “new financial responsibilities” for the State.

Despite revising upwards the target for next year, the Government maintains its commitment to reduce public indebtedness in the coming years. “From 2016 to 2018, the ratio of public debt to GDP decreased by almost ten percentage points. The Government estimates that in 2023 this indicator will reach a level very close to 100%”, says the Executive headed by António Costa in the draft budget sent to the European authorities.

“In order to achieve this goal, all extraordinary revenues must continue to be allocated to the reduction of public debt,” the government said.