Public debt below 100% of GDP in 2030s

 In News, Public Spending

Portugal’s government will only succeed in getting its public debt down to 100% of GDP at some time in the 2030s.

This is because Portugal’s economy was severely affected by three crises in a decade — the financial crisis, the sovereign debt crisis and the pandemic crisis.
The public debt trajectory should progressively be reduced over the coming years — if there is not another major crisis — according to a sustainability analysis on public debt as part of the Stability Programme 2021-2025.
The study suggests the ratio will only fall below 100% of GDP in the 2030s, more than 20 years after it had last been at this ratio.
The last time that Portugal’s public debt ratio was below 100% of GDP was in 2009 (87.9% of GDP) and has never returned to that level since.
In 2019 it hit 116.8% of GDP, succeeding in recovering from almost all of the hit it had taken because of the troika years, but the Covid-19 pandemic set this improvement back.
The government ’s debt to GDP projects are 128% this year, 123% in 2022, 121% in 2023, 117% in 2024 and 114% in 2025.
The study points to the government only achieving a debt to GDP ratio less than 100% by 2035 as a result of reducing the deficit and growing the economy.
“The ratio of public debt to GDP that began to go down from 2016 should start to go down again by 19.3 p.p. of GDP by 2025 by which time it should stand at 114.3% of GDP, a lower value than the one seen in 2019,” states the government in its Stability Program.