Edition 1453
09 December 2017
Edition: 1453

Read this week's issue online exactly as it appears in print.

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Economists concerned with high government debt

by TPN/ Lusa, in News · 06-12-2017 08:37:00 · 0 Comments

Five Portuguese economists said on Tuesday they were concerned with the high government debt and that there were risks with the end of the ECB programme and the impacts of paying high interest has on public services.

Economists concerned with high government debt

 

The five economists Abel Mateus, Daniel Bessa, João Duque, João Ferreira do Amaral and Vítor Bento were speaking to MPs in parliament.

 

Abel Mateus, who is a Bank of Portugal consultant, said the government debt is the number one problem in the Portuguese economy over the medium and long term, alerting MPs to that fact that its sustainability was precarious.

 

He added that the suppositions in next year’s budget were unrealistic as they considered that interest rates would remain stable over the long term, which he did not believe would happen and the end of the ECB programme could increase the costs of Portugal’s government debt.

 

Daniel Bessa started by saying the debt had to be paid and that the weight of the interest on the economy had gone down considerably since 2014, when it was 4.9% of Gross Domestic Product (GDP) to a forecast of 3.6% this year.

 

João Duque, a professor at Instituto Superior de Economia e Gestão (ISEG), said he was concerned with the weight the debt service has and will have on public services, particularly Social Security and Health, with an aging population.

 

His calculations showed that Portugal would only manage to get government debt down to 60% of GDP (the target set by the Stability and Growth Pact) in 2056.

 

João Ferreira do Amaral, who is also an economist at ISEG, said that “Portugal is in no condition to converge with the European average” because of the weight of the debt.

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Edition 1453
09 December 2017
Edition: 1453

Read this week's issue online exactly as it appears in print.

Twitter