Public spending watchdog issues debt warning

The Portuguese government entity which monitors public sector spending, the Tribunal de Contas, has issued a warning about “the high level of Portugal’s public debt”.

The TdC says that it is important for the Government to better gauge the risk resulting from the high level of public debt and suggests that the State should provide more complete and detailed information on various areas in its public finances report.
“The high level of public debt is a very significant risk for the sustainability of public finances”, states the TdC just weeks after the country’s finance minister João Leão said public spending was back under control after two years of emergency public spending to offset the economic consequences of Covid-19.
Portugal’s accumulated public debt currently stands at around €269Bn. It was the third highest in the EU in 2021 when in the third quarter is hit 130.5%. However, the Government has succeeded in bringing it down.
The advice from the TdC was contained in a report entitled ‘The Beginning of a new Legislature: A Contribution towards improving Public Management and Sustainable Public Finances’.
In its analysis, the institution led by José Tavares (pictured) emphasises that intergenerational equity means cautioning of the current risk of a high level of public indebtedness.
It therefore recommends that complete information on the “impact of financial support to companies and families in terms of public guarantees, capital injections, loans, assets acquisitions, and debt exemptions, as well as “the analysis of the sensitivity of public accounts to changes that have occurred in interest rate policies and debt acquisition by Eurosystem, that have been essential for Portugal to secure re-financing”, and the “link between executing the budget for the year, the concretisation of the Recovery and Resilience Plan (RRP), and progress in terms of the ‘Agenda 2030 Sustainable Development’ goals” should also be included in the public finance report.
The TdC also recommends the fast-tracking and prioritisation of the defining of the Budgetary Framework Law, as well as the implementation of the State Accounting Entity, the TdC considering providing “complete information about financial patrimony, property and public debt” necessary.