Portugal’s political stability, fiscal prudence great for business

Portugal’s prime minister, António Costa, has told German businesses in Portugal that the country is one in which they can have confidence, as it is one of the few that are politically stable and is following a path of fiscal consolidation even in the current international environment.

Costa made the comments at the end of a dinner on Tuesday sponsored by the Lisbon-based Luso-German Chamber of Commerce and Industry, to celebrate Portugal’s status as a guest country at this year’s Hannover Messe, one of the world’s largest trade fair.

In a speech lasting about 30 minutes, before an audience of business representatives, the leader of Portugal’s Socialist government acknowledged the difficulties presented by the current international situation, but argued for the thesis that Portugal has the ideal geographical position to be at the forefront of the digital transition, has a demonstrably strong commitment to renewable energy, has overcome an old deficit in terms of the level of qualifications of its population, and has yet to apply the European Union funding through the Recovery and Resilience Plan and the Portugal 2030 plan to spend regional development funds.

“Beyond the geographical position, beyond the human capital, beyond the funding opportunities, the truth is that we have an institutional, geopolitical and financial framework that can be an acquired confidence factor,” he told his audience. “Portugal has political stability, as very few countries have it.”

Costa noted that Portugal was held to be “the fourth safest country in the world – and in times of war this is no small thing – and has managed to maintain a firm trajectory of consolidation of public accounts.

“Despite the [euro-zone] Stability Pact being suspended, we already managed last year to stay below the three-percent deficit threshold and this year we will surely stay below or at least very close to the objective, with a deficit of 1.9 percent,” he said.

According to Costa, in 2021, despite extraordinary state support to combat the impact of the Covid-19 pandemic, “Portugal managed to resume the reversal of the weight of debt in the gross domestic product.”

“With confidence we can say that we will get to a debt-to-GDP ratio of one hundred percent at the end of this parliament,” he went on, referring to the assembly elected in January. “We can continue to maintain the targets even in this scenario of uncertainty that surrounds us, which is a very important factor of confidence.

“In this context, the rating agencies have continued to improve their outlook on Portugal,” he added.