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Optimal Fiscal Path Considerations: Portugal
Author:
Mr. Ippei Shibata https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Volodymyr Tulin
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Series:
Selected Issues Papers
Volume/Issue:
Volume 2023: Issue 045
Language:
English
Publication Date:
11 Jul 2023
DOI:
https://doi.org/10.5089/9798400247231.018
ISBN:
9798400247231
ISSN:
2958-7875
Pages:
10
Keywords:
Fiscal stance; cycle stabilization; government deficit; government debt; Washington, D.C. International Monetary Fund; Portugal's debt ratio; model point; interest rate sensitivity; I. model detail; Real interest rates; Fiscal consolidation; Government debt management
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IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries. It is based on the information available at the time it was completed.
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Despite achieving a rapid reduction in the public debt-to-GDP ratio in recent years, Portugal's debt ratio remains relatively high at 113.9 percent of GDP in end-2022. This paper employs an analytical model to determine the appropriate trajectory for structural consolidation to sustain ambitious debt reduction over the medium term, taking into account the uncertainties in the economic landscape. The model points to a need for continued fiscal tightening between 2024 and 2028. Optimal consolidation would be higher under higher longterm interest rates, lower medium-term growth prospects, or increased market sensitivity to debt.
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Cover Selected Issues Papers
Selected Issues Papers
Publisher:
International Monetary Fund