IMF: Portugal pays 26% GDP to satisfy creditors

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With a 26% set-aside of GDP, the International Monetary Fund (IMF) says that Portugal is one of the most vulnerable countries from a group of 52 when it comes to paying creditors.


Despite a relatively small public deficit which has been falling in recent years,  the Portuguese economy is among the countries most reliant on financing in proportion to its GDP.

The IMF says that its debt is a huge problem and will have among the greatest difficulties to pay off its debts to creditors over the next two years (2018-2019).

The Fiscal Monitor for the Spring, presented in Washington this week by ex-finance minister Vítor Gaspar, who is currently the IMF director for Public Finances. The country having to make the greatest sacrifice is Japan which has to set aside the equivalent of 74% of its GDP in the two years under evaluation to pay its creditors. Italy has to set aside 42% of its GDP equivalent to meet its creditors, Belgium (33.7%), Spain (30.4%) and Portugal (26.4%).

In 2018 and 2019 Portuguese tax payers will have to set aside the equivalent of 26.4% of GDP to pay the country’s creditors and payoff its debts.

Converted into euros (on GDP foreseen by the IMF), it means creditors have to receive €25.5Bn this year and €28.4Bn in 2019 (€53.9Bn).

In addition, Portugal has to finance the deficit from these two years (1% in 2018 and 0.9% in 2019).  Since Portugal doesn’t have sufficient resources it must borrow from the financial markets. On the positive side, Portugal can now finance its day-to-day expenditure by borrowing in the international markets at much lower interest rates. The Government expects to achieve a budgetary surplus by 2020. (0.7%)