Flash Notes

3 de Maio de 2018
Flash Notes
  • Public accounts continued to improve in 2017, if we exclude the effect of the recapitalization of Caixa Geral de Depósitos (one-off effect). The deficit reached the lowest level (at least) since 1974 (-0.9% of GDP), benefitting from the favorable economic environment in 2017, the low funding costs and the control of the public expenditure. At the same time, benefiting from the primary surplus, economic growth and the reduction of interest charges, the public debt ratio decreased to 125.7% of GDP at the end of 2017, a key development for the assessment of foreign investors and institutions.
  • The scenario outlined in the Stability Program for the period 2018-2022 reveals a commitment to maintain the consolidation of public accounts, with the Government anticipating a budget surplus in 2020, and the public debt ratio falling to 102% of GDP in 2022. Although we consider this scenario to be too optimistic, the assumptions presented for 2018-2019 are quite plausible, configuring the continuity of the path of fiscal consolidation and the reduction of public indebtedness, albeit at a pace somewhat slower than that implicit in the official scenario. However, there are some risks: external (global growth, global risk perception) and domestic (evolution of economic activity and eventual unexpected financial support to banks).
  • This more favorable scenario has led some institutions to review their forecasts for Portugal, such as the IMF, and international rating agencies to be more positive about the path outlined so far and to assess the future of the country in a more optimistic way, like the DBRS.