IMF Mission Chief Abebe Selassie has urged Portugal to continue its tough budget adjustment despite continued efforts over the last 18 months, and has revealed that the GDP previsions will not be revised.
Portugal must reduce its high debt levels and return to debt markets to finance itself at reasonable interest rates, the IMF told the Portuguese media Thursday in an official statement.
“Portugal has made substantial progress in the past 18 months in terms of structural reforms and public finance consolidation through great sacrifice and determination on behalf of the Portuguese authorities and the people of Portugal,” Abebe Aemro Selassie wrote on the official IMF website. “But the country’s deficit is still high and has to be retained in order to guarantee a full recovery. Portugal must restore its capacity to finance itself at reasonable tax rates.”
The IMF mission chief for Portugal added that the state budget was “imperative” and had to be pursued.
In the same statement Thursday, Selassie announced the IMF did not consider a revision of the GDP growth previsions necessary.
The GDP predictions were agreed by the Portuguese government in the fifth revision, when the country decided to make them more flexible in light of the accentuated deficit and soaring unemployment. The budgetary deficit was raised from 3% to 4.5% of GDP, higher than initially foreseen.
The IMF recently revised its figures concerning fiscal consolidation measures and now estimates a higher negative impact of 2.8% to 5.3% on Portugal’s gross domestic product, suggesting that GDP figures featured in Monday’s state budget are not realistic, reports daily Público.