IMF expects deficit of 2.4%, public debt of 121.6% of GDP

The International Monetary Fund (IMF) expects that Portugal will reduce its deficit to 2.4% this year and the public debt ratio to 121.6% of gross domestic product (GDP), higher than expected by the government, according to forecasts released on Wednesday.

According to the updated data published today, the IMF forecasts that the budget balance will fall from -2.8% recorded in 2021 to -2.4% this year and then to -1.6% in 2023.

These projections set the deficit above the 1.9% expected by the government for this year in the draft 2022 ​b​​​​​udget.

According to IMF projections, Portugal will continue on a path of deficit reduction but does not expect to achieve budget surpluses over the projection horizon.

The data points to a deficit of 1.1% in 2024, 0.9% in 2025, 0.8% in 2026 and 0.9% in 2027.

According to the IMF, the public debt ratio will fall to 121.6% of GDP this year, also above the 120.7% forecast by the government.

The institution led by Kristalina Georgieva forecasts a reduction in the public debt burden to 117.9% in 2023 and 114% in 2024.

It anticipates that the downward trajectory will continue throughout the projection horizon, reaching 110.5% in 2025, 107.3% in 2026 and 104.5% in 2027.

The primary budgetary balance (without interest) should return to positive territory in 2023 (0.5%) after the deficit in 2022 (-0.3%). According to the projections, Portugal should achieve a surplus in the primary balance of 0.8% between 2024 and 2026.

On Monday, the IMF cut the growth outlook for the Portuguese economy to 4% this year and 2.1% in 2023.