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The Portuguese Public Finance Council releases today the report “Public Finance: Position and Constraints 2015-2019” that aims at characterising the state of Portuguese public finances, as well as the respective constraints, at the beginning of the annual cycle of updating the fiscal strategy underlying the Stability Programme.
This Report presents a baseline scenario for 2015-2019 which was elaborated under a no-policy-change assumption. The aim of this exercise is to contribute to the defining of the background against which the new decisions will be taken, rather than to forecast economic or fiscal developments, which are clearly dependent on those decisions.
The results clearly stress the need to continue the fiscal consolidation effort. Although the objective of achieving a deficit under 3% of GDP in 2015 and bringing the Excessive Deficit Procedure to an end seems feasible, in the absence of additional policies, and despite the convergence of the economy to its potential growth, the deficit will once again exceed that threshold from 2016 onwards. As a consequence, the debt ratio will fall considerably less than expected in FSD/2014 (to 121.9% in 2018, instead of 114%).
In fact, fiscal pressures stemming from demographics and from the high debt ratio continue to call for a major effort in the direction of increasing the effectiveness of public service provision, accompanied by a greater ability of the private sector to generate income and attract financing.
Date of last update: 18/03/2015
