Portugal with public debt of 135% of GDP and deficit of 7.1% in 2020

The International Monetary Fund (IMF) foresees for Portugal a public debt of 135% of the Gross Domestic Product (GDP) and a deficit of 7.1% in 2020 due to the covid-19 pandemic, according to the ‘Fiscal Monitor’ published today .

According to the IMF document, public debt will increase from 117.7% of GDP in 2019 to 135% in 2020 due to the pandemic, and is expected to drop to 128.5% in 2021.

The budget balance, on the other hand, will increase from a 0.2% surplus in 2019 to a 7.1% deficit in 2020, falling to 1.9% in 2021.

The primary balance (without interest expenses on public debt) will go from a surplus of 3.1% of GDP in 2019 to a deficit of 4% in 2020 due to the pandemic, returning to a positive balance of 1% in 2021, according to IMF forecasts.

According to the statistical annex of the IMF to the “Fiscal Monitor”, as a percentage of GDP, income will increase from 43.3% in 2019 to 42.9% in 2020, increasing again to 43.4% in 2021.

The biggest impact is likely to be seen even in spending as a percentage of GDP, which will rise from 43.1% in 2019 to 49.9% in 2020, up to 45.3% in 2021.

The IMF also projects that the difference between interest rates and growth, in 2020 and 2021, will be 3.6%, lower than that of Spain and Italy (4.5%).

Portugal’s gross financial needs are expected to reach 18.6% of GDP in 2020, according to the Washington-based institution.

The IMF predicts a recession of 8.0% in the Portuguese economy and an unemployment rate of 13.9% in 2020, due to the covid-19 pandemic, according to the World Economic Outlook published on Tuesday.

The eurozone economy is expected to experience a recession of 7.5% this year, according to the IMF, then bounce back to 4.7% growth, and the aggregate unemployment rate for 19 countries is expected to rise from 7.6% to 10.4%. , falling to 8.9% in 2021.

The IMF also predicts that the world economy will recession 3% in 2020, as a result of the nickname “Great Confinement” due to the covid-19 pandemic.

According to the IMF, given the measures of budgetary support to combat the covid-19 pandemic, both of a sanitary nature and to support the economy and society in general, in advanced economies “the average budgetary balance in 2020 is expected to deteriorate significantly. “

According to the “Fiscal Monitor” known today, who analyzes fiscal policies around the world, “the spread of” differentials “is expected [das dívidas] of sovereigns [Estados] and businesses, with a decrease in financing costs for sovereigns that are considered safe and a simultaneous liquidation of assets that are perceived as risky. ”

Noting that before the covid-19 pandemic “effective nominal rates were below 2% in more than a third of advanced economies,” the IMF notes that these rates “are expected to fall further in safe countries (for example, United States, Japan and Germany) “.