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Posted 9 Outubro, 2024 In Growth, News, Public debt, Public Finances, Public Spending
The Portuguese State’s current account public spending has not been as high as it is now since 1992.
This is despite various governments having succeeded in reducing Portugal’s overall accumulated public debt from around €120Bn to €100Bn over the past few years.
However, annual public and government spending reached a 30-year record in 2024, raising some painful questions for the current PSD government led by Luís Montenegro.
The Bank of Portugal has also cut its growth forecast for this year by a significant amount, calculating slower growth than the government has calculated.
“Not since 1992 has current public spending risen so much as it has done this year”, said the Governor of the Bank of Portugal, Mário Centeno at a press conference to present its Economic Bulletin for October.
In the bulletin, the Bank of Portugal has slashed the country’s growth forecast for this year from 2.0% to 1.6%, as well as for next year from 2.3% to 2.0%.
The governor stressed that “given the sensitivity and timing,” these comments should not be seen as any budgetary considerations, but he did recall that “we have all been through enough years and enough budgets to know what that means.” Moreover, “in the coming years we will have to start paying the RRP”, which will bring a new source of pressure on Portuguese public accounts.
The country’s economic situation is, however, “enviable” insofar as “very few countries in Europe can face the new European cycle, with the uncertainties it brings, with the stability that Portugal has”. A sign of this positive evolution is that “there were wage increases in Portugal in all years of this inflationary cycle”, a situation that has boosted private consumption and sustained growth in the face of the country’s chronic low investment.