The finance minister defended this Monday that the government cannot pursue expansionist policies, which is wrong in the current context of high inflation, and defended fiscal and monetary policy cooperation, in which central banks and governments do their respective jobs.
“We cannot have an expansionist policy, because that would be wrong at the moment,” defended the finance minister while participating in the conference marking the first anniversary of CNN Portugal, where he spoke to journalist Pedro Santos Guerreiro about “A sustainable fiscal policy for the European Union”.
Asked about the European Central Bank (ECB) raising interest rates to respond to rising inflation, Medina admitted that “there are always tensions in times of rising interest rates” but defended a “cooperative approach between fiscal and monetary policy” as a way to achieve better results for the economy and for employment.
“I opposed this strategy of shifting blame – a government shifts the blame to the central bank, the central bank shifts the blame to governments – […] I have an alternative proposal, which also has nothing innovative, which is policy coordination, where everyone does their part,” the government official defended.
Regarding the government’s responsibility, Fernando Medina stressed that fiscal policy “is not aimed at expansion”, but also “not aimed at contraction”.
“It’s a policy that tries to be neutral. We’re not trying to contribute to the contraction of the economy, […] but neither can the state be an accelerating element of an inflationary process, which indeed already has internal roots. […] That’s what I think it is to fulfill our part,” said the minister.
Asked about the difficulties experienced by home loan holders, Fernando Medina said he was “concerned”, although noting that “the problem is more concentrated in more recent loans, where interest rates are still very high” and that the “stock” of credit in the country “is older than it was a few years ago”, that is, less exposed to interest rates.
The finance minister also reiterated that Portugal will reach a debt of 115% of gross domestic product (GDP) by the end of the year, admitting that the legacy he wants to leave as ruler is to contribute so that ” the debt of the state is no longer a problem for economic actors, for families in their financing […] and that public debt becomes an asset in the financing conditions of the economy”.
Regarding the implementation of the Recovery and Resilience Plan (PRR), Medina explained that when it comes to investment funds, “it is necessary to carry out studies, projects, tenders” and defended that, despite being procedures where in a democratic society one must “assess whether they are proportional”.
Source: DN
