Portugal’s Outlook Raised to Positive by S&P on Falling Debt
In your view,
does the European Central Bank have the firepower still,
whatever it is,
to re-estimulate the Euro-area economy and your own economy,
which your own central bank sees starting to slow down?
and good afternoon.
I think that the European Central Bank has proven in the past that it is enough firepower
to withhold the Euro-area.
But as the Governor-Marie Dragier just stated,
it may also the point that it should be,
it will be also for governments to push the stimulus and internal demand,
has got its limits.
But I think that the push that the ECB may be doing is going to be important in supporting
the economy in this time of uncertainty.
As we fold in,
slowing growth and the ECB into the bond and interest rate dynamics,
I must fell off my chair when I took a look at your tenure,
which is below one percent.
We talk here in the U.S.,
a big deal closing below two percent on our tenure.
What if you’ve done to sort of decouple yourself from the worries of peripheral Europe and become really,
a firehouse for the bond yields?
I think that the sort of fiscal discipline that the country has shown in the last five years or so
has been very significant.
We’ve been consistently delivering on a budget,
which is demanding,
which as we balance the budget this year,
so that as consistently shown the markets that we
are committed to the reduction of the government theft,
and that has been impacted by the fact that
markets are recognizing that.
And we are completely decoupling from economies such as
other southern European economies in terms of yields.
How important is that decoupling and how fast is it to happen when we’re not right now at a stage
where rates are historically low across,
at least in the major economies,
and presumably going a lot lower?
you may be reminded that Portugal have a bailout program just less than 10 years ago,
and we have to make a significant effort.
There’s still a lot of debt in the economy.
So what we believe that we took the advantage of these years of expansion to really make an effort
to reduce the balance the budget and reduce the debt.
And we are committed to continue doing so,
We think that it is time for Europe to,
as a whole,
and the Western economies,
to push for stimulus and support the demand.
But we believe that it’s not for the peripheral
in depth to the economies in the south to do that part of the effort.
So we are committed to delivering
on the budget.
in the last year or two,
I started noticing that,
half the people I follow on Instagram were visiting Portugal.
Your country has had a huge tourism boom.
We also know that there could be,
there’s no guarantee that last.
you just got news today,
Iceland may be slipping into its first recession,
thanks to slowing tourism.
which is what major source of tourists to Portugal.
are you about the sustainability of what’s become an important driver of your growth?
we believe that what the effort at the strategy for tourism in the past three years has been
to diversify the destinations within Portugal and to expand offer around the year.
the regions which have most increased our outside the traditional Lisbon and the South regions.
And we are delivering on that.
We have made a significant effort in connecting directly
the country to other areas.
We have increased significantly direct flights from the U.S.
which is meant that just last year,
one million American visitors were in Portugal.
This is more or less the double of what it was three years ago.
So we think that this is an
sustained growth there.
And I think that the country is a small country,
but very diverse
in terms of landscape,
more peaceful country in the world.
And so it’s a preferred choice for visitors.
We discovered the world 500 years ago.
the world is discovering important.
you were talking earlier about balancing your
And there is,
as we know,
two additions to that equation,
raising the revenue and reducing expenses.
we know revenue has been increasing.
What have you done on the expense side to reduce expenses to make sure that budget is balanced?
what we are doing is that we are making sure that government expenditure is below the growth
of nominal GDP growth.
And as a result,
the level of expenditure is a percentage of GDP has been
So it’s difficult to be managing this.
But at the same time turning the page on austerity
and making sure that people didn’t fail the contraction on their income tax or on the salaries
which are being paid by government,
we didn’t grow the expenditure as much as GDP demand.
That has been the effort.
And then being very strong on the growth in employment has helped
the income side and the reduction of debt.
The most significant contribution has been the reduction
of interest on public debt.
Because just the fact that you are now going down on that,
meant significant savings on interest.