Central bank governor warns of short window for investment

The governor of the Bank of Portugal, Mário Centeno, warned on Monday about the “short window” of time to implement the RRP and warned that to miss such an opportunity would waste the most relevant moment since the creation of the euro.

“In addition to the structural impact on economic growth, the RRP [Recovery and Resilience Plan] carries out public and private investments without burdening public accounts in the short term. However, in the implementation of the RRP, attention should be paid to the challenges inherent to the very short time window of the use of funds,” he said at a meeting in Lisbon on the challenges of the Portuguese economy in the post-pandemic period, organised by the Bank of Portugal and the weekly Expresso.

Mário Centeno stressed that European resources “should be used to consolidate sustainable economic growth” and finance the digital and climate transition and that this transition should be supported in the “efficient use” of RRP funds that were made available on a non-repayable basis.

“Missing this opportunity is to waste the most relevant moment of European integration since the creation of the euro,” said Mário Centeno, praising the contribution of the RRP to the reduction of the public debt to Gross Domestic Product (GDP) ratio.

The governor also said that, at this time of pandemic disruption, the key element is the stability and predictability of national and European public policies and praised the contribution of the RRP to reduce debt.

Mário Centeno also noted that it was “essential” to reduce the public debt ratio, a reduction that he argued should be supported by a credible budget reduction plan, and said it was “evident” that the private and public sectors “should start deleveraging” to enable Portugal to face future crises.