Portugal ignores its public debt problem says economist
A Portuguese economist has warned that Portugal has a “public debt problem” that makes it difficult to combat the coronavirus pandemic.
In an interview with the news agency Lusa, Vítor Bento said that despite the virus affecting all countries by equal measure, when the time comes to supporting economic recovery, not all will have the same conditions to do so because of their levels of public debt.
“That’s the truth, but the problem is that we’ve spent so much time ignoring the public debt” says Vítor Bento adding that many had been warning about Portugal’s level of national debt constituting a huge vulnerability which can “hit particularly hard during an unpredictable crisis”.
“Once again we are being confronted with a harsh reality given the choices that we are making and which will leave a heavy burden on the future.”
The latest numbers known for Portugal show that the country ended 2019 with a budgetary surplus of 0.2% of GDP, the first positive result in the history of Portuguese democracy, but recorded a public debt equivalent to 117.7% of GDP.
The Euro Zone average for 2018 revealed a budget deficit of 0.5% of GDP and an average public debt of 85.9% of GDP.
Vítor Bento says that these results are a consequence of the political policies followed by the Government. “A social choice was made and being a social one, a political choice was also made to cover up the reality of this public debt,” said Bento, warning that today “there are still many people who don’t think the country’s debt is a problem and that the country should take on even more debt.”
Nevertheless, Vítor Bento admits that Portugal has sought to make economic adjustments, “Although using an inappropriate rhetoric” which has “enabled the accounts to be squared”.
However, the economist said that within this adjustment, which had led to a positive budget balance in 2019 “perhaps we didn’t make the right choices we should have.”
“When we opted to reduce the number of working hours in the public sector instead of investing in the National Health Service or when it was decided to increase salaries instead of reinforcing certain fundamentals these were political choices from which today we have to suffer the consequences,” he said.
Vítor Bento made the suggestion that the Government now could take advantage of the situation by reequipping (the health service) which because of budgetary constraints had been put off and in some cases had been left so long they were leaving the system in a state of nothing more than “skin and bones”.
“This eventually could provide an opportunity to reposition our national industry to meet these needs” said the economist.
