Central bank governor says “premature to talk of deficit”

Portugal’s central bank governor, Álvaro Santos Pereira says it is to early to say if the government could end up in the red this year.

The governor of the Bank of Portugal, who spoke at a lunch organised by the American Chamber of Commerce in Portugal (AmCham Portugal) this afternoon (Monday, April 20) admitted that the longer that the war in the Middle East continues, the greater the risk for the global economy, including Portugal.

At the end of last week the governor was in Washington in the United States where he visited the headquarters of the International Monetary Fund for the World Bank Spring Meetings . “If the conflict gets worse, and if there is an attack with a greater impact on oil tankers or oil and gas installations, this can have an impact on supply in the short to medium terms and this can have a much longer lasting negative effect and this is obvious”, he said.

But he stressed it was too early to say if events in the Gulf would effect the deficit or if inflation would rise to or above 2.9%.

“I think it’s too premature to say if we’ll have one scenario or another scenario. We hope that the conflict can be resolved as soon as possible, and that governments limit their support to those who are most vulnerable and the most affected sectors.”

“Otherwise this will have a huge budgetary cost and could cause the economic situation of countries at risk in the short to medium terms.”

In terms of artificial intelligence, Álvaro Santos Pereira said that Europe was not even close to being on the heels of the United States of America, therefore it was “absolutely vital” to once and for all to have a single market for all, improve the business climate in Europe to put more investment in this important area”, he added.

On the sidelines of the meetings, a new network of financial and economic cooperation was created for Portuguese speaking countries.

“The central banks of the Portuguese speaking countries are meeting to discuss creating a kind of G7 of these countries to share experiences at the central banks level such as on payments and financial literacy, and banking”, the governor added.

The IMF has warned of the risk of a global recession if the conflicts in the Middle East continue.

Source: RTP; Credits: TIAGO PETINGA/LUSA
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