LISBON (MNI) — Carlos Costa, the governor of the Bank of Portugal,
said Tuesday that the path ahead for Portugal will require many
sacrifices given the acute need to “rectify the trajectory of
accumulation of deviations” and the “accumulation of public debt.”
Speaking at a conference entitled “The State and the
Competitiveness of the Portuguese Economy” one day after the Portuguese
finance minister presented the 2012 budget, Costa stressed that at the
end of Portugal’s financial aid programme, the country will still be
highly indebted.
The governor said everything needs to run smoothly, though noted
that even so, Portugal’s external debt is still expected to be 124% of
GDP in 2014 and Portuguese families’ indebtedness 101%.
Costa said that Portugal must have normal access to financial
markets and Portugal’s return to normality at the end of the program
“will not be a return to the past, but a return to a new normality.”
One of the requirements for this “normality,” according to Costa,
is the consolidation of public finances. He noted that cuts in public
administration must be done in stages and called for an increase in the
productivity of public administration.
While Portugal will still have high debt at the end of the program,
not only will Portuguese families need to cut back on credit, but
non-financial companies must also help in the deleveraging process.
“We need the confidence of the financial markets,” said Costa, who
added that Portugal needs a more efficient economy and must be more
competitive.
The Portuguese need “to save more, invest better and use credit
more responsibly,” he said.
–Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com
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