Valdis Dombrovskis, Vice-President of the European Commission, considers that Portugal is a “good example” in reaching the good economic moment of the last years to reduce the ratio of the public debt to the Gross Domestic Product (GDP), even though the pandemic has led to a new climb.
“Portugal is exactly a good example of a country that took advantage of the good times in the economy to lower the level of public debt. It was around 130% of GDP after the global financial economic crisis and was decreasing below 110% of GDP. Now it has returned to 130%, but has allowed room for maneuver. And we know that not all countries with high debts really take advantage of the good economic times to reduce the level of debt ”, said the executive vice president of the European Commission, responsible for the Economy at the Service of People, on the sidelines of the visit to Lisbon with the President of the European Commission, Ursula von der Leyen, and seven other members of the College of Commissioner, in an interview with Jornal Económico.
The head of the community executive stressed that "this is something that distinguishes Portugal in this particular situation".
Asked if Portugal had room for more support from fiscal stimulus without compromising the future of public finances, having the third largest debt ratio in the eurozone, the vice-president of the European Commission underlined that “this is exactly the logic behind the plan European economic recovery ”.
“The plan basically recognizes that there are limitations in several Member States of the European Union due to the high level of indebtedness, and it is greater in the countries of the south and east, due to the low levels of economic development. It is difficult for countries to come out of this crisis alone. Therefore, the European economic recovery plan and the Next Generation EU have a substantial subsidy component that allows member states to stimulate the economy without aggravating the debt ”, he stressed.
Still, he admitted that balancing fiscal stimulus to the economy and long-term fiscal sustainability is an issue that exists. "Therefore, with regard to Member States' budgets, we have emphasized that the necessary stimulus measures must be temporary and targeted and not become a permanent burden on the budget deficit," he said.
“At this point, our advice to all Member States is to take the necessary measures to stabilize the economy, to support companies, to support workers. As we persevere in the capacity of our economies, the potential of our economies, the faster the economy will be able to recover after the pandemic. This is exactly our recommendation for the Member States today ”, he stressed.