Moody’s doubts that deficit is below 3% this year – Express

The agency “rating” Moody’s does not believe that Portugal can meet the set target of 2.2% for the budget deficit due to weak economic growth, anticipating a 3% deficit.

“the Portuguese economy continues to grow much more moderate than other peripheral countries like neighboring Spain. Therefore, economic growth will not give great support to the planned fiscal consolidation and reduction of the high public debt ratio,” said the agency financial rating in a note issued to its customers and the Express had access.

Moody’s, which this month kept the “rating” of Portugal to Ba2, with a perspective “stable”, stresses that growth remains moderate after years of structural reforms “that are not showing results in the form of a stronger and stronger economy.”

With public debt at 129% of GDP (at the end of 2015 ), “among the highest of all countries rated by Moody’s,” the institution provides for a gradual decline of this ratio in the coming years, but notes that this correction will depend on the budgetary slippage and economic growth. Still, expects the debt ratio remains above 120% of GDP by the end of this decade.

On that note, Moody’s also highlights the “concerns persist about the outlook for finances public Portugal. ” With lower growth forecasts, the rating agency estimates a budget deficit of 3% of GDP this year (above the target of 2.2% provided by the government). However, the agency believes that this deviation should be contained, “given the intense scrutiny of budgetary progress in Portugal by the European Commission.”

The Moody’s also notes that “over the past few years, the performance budget Portugal has repeatedly negatively been affected by the injection of public money into various banks. ” And the government may still be called to put capital in the sector this year, particularly in the public bank, CGD. In addition to the state’s finances and operating deficits of public companies, “the persistent weakness of the banking sector remains a key risk to the rating of Portugal credit”, believes the agency.

In a positive perspective, the Portuguese economy has seen improvements in their competitiveness indicators. Exports weigh now 43% of GDP, compared with 32% in 2010. A surplus, according to Moody’s note, should be maintained.