Governor of the Bank of Portugal criticises low execution rate of Portugal’s Recovery and Resilience Fund

The Governor of the Bank of Portugal, Mário Centeno has criticised the low execution rate of European ‘bazooka’ funds which he calls “dramatically low”.

The former Portuguese finance minister was speaking at the conference “The State Budget 2023’ organised by the Association of Economists which took place on Wednesday at ISEG (Lisbon School of Economics and Management).
Mário Centeno said that despite three-quarters of the RRP investment earmarked for the private sector, the State Budget still had “a word to say” about how and how fast the funds were applied.
Moreover, the Governor of the Bank of Portugal said that currently less than 20% of public investment from the RRP was from European funds, stressing that: “The execution rate of the RRP has been below what was expected”, much of it down to a “considerable increase in the cost of projects” because of inflation throughout the year.
Portugal has received around 20% of the total €16.6Bn allocated by Brussels in the RRP, but only €1Bn has actually been distributed on the ground so far.
The State Budget for 2023 foresees a 37% growth of public investment to around 3.5% of GDP, to the highest level since 2011 – an increase that will be supported by European funds.
In his speech made via videoconference, Centeno stresses the importance of a strong coordination between European Union institutions as happened in 2020, emphasising in his speech the need for tighter bonds of coordination between budgetary policy and monetary policy”.