Portugal’s debt rating, i.e. the country’s ability to service debt and pay national and international creditors, has moved up a notch, from A (low) to A, the Canada-based financial rating agency announced on Friday, July 21. The perspective (outlook) is “stable”, the company adds.
The category upgrade reflects DBRS Morningstar’s view that the significant improvement in Portugal’s fiscal performance and debt, in the face of difficult external developments, points to increased resilience and a reduction in credit risk.
“Public finances have benefited from healthy economic growth, steadily rising tax revenues and reduced crisis-related spending.”
For example, “the government deficit was consolidated to 0.4% of GDP (gross domestic product) in 2022 and could reach balance or surplus this year”.
“The combination of stable economic growth and strong primary surpluses resulted in a sharp decline in the government debt-to-GDP ratio, which the Bank of Portugal (BdP) estimates could reach 92.5% of GDP by 2025,” the agency adds.
“The note (rating) can be improved if the Portuguese authorities manage to reduce public debt more than expected or if the country improves its economic resilience and growth potential.”
Conversely, future ratings “could be downgraded if political commitment to sustainable macroeconomic policies diminishes, resulting in a significant deterioration in the outlook for public finances”.
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Source: DN
