Paulo Novais / LUSA
The Prime Minister, Luís Montenegro, during the inauguration visit of requalified spaces at the Escola Superior de Educação of the Instituto Politécnico de Castelo Branco, November 14, 2024. PAULO NOVAIS/LUSA
The Prime Minister said this Friday that the “stubbornness” regarding the Banco de Portugal (BdP) forecasts will only be removed at the end of 2025. What Centeno makes are just predictions — “and they appear in the opposite direction”.
“I think the issue will be on December 31, 2025. We will only be able to define this difference of opinion during the year 2025 and, specifically, at the end of the year, when the budget exercise ends and I believe that , in essence, Banco de Portugal’s perspectives are no different”, said Luís Montenegro, in Porto.
The Bank of Portugal (BdP) estimated this Friday that the country will return to a deficit situation in 2025, with a deficit of 0.1% of GDPwhich contradicts the Government’s projections of fiscal surplus.
Don’t worry: these are just predictions
The head of the Government recalled that the BdP’s forecasts are exactly that, forecasts.
“These are predictions. In any case, they appear a little contrary, since there is no longer any entity that follows the pessimism that the governor of the Bank of Portugal expressed from the point of view of budget performance for next year”, he said.
Luís Montenegro highlighted that the Government’s position “is to maintain firmness and confidence in achieving the objective of having a surplus next year”, adding that “situation is absolutely under control”.
Centeno advises correction of deviation
“The Bank of Portugal in the role it has in its mandate vis-à-vis the Portuguese Republic is advise“, Mário Centeno reiterated this Friday, in the presentation of the December Economic Bulletin, in which he also warned of the risk of non-compliance with European rules, with regard to the growth of net expenditure.
Net expenditure “grew in Portugal by 10.8% in 2024, far above of what would be the reference calculated based on nominal potential GDP growth”, highlighted Centeno.
In the central bank’s forecasts there is a growth in net expenditure “above European benchmarks for Portugal and this situation results in some risk of non-compliance with European rules”, he warned.
The calculations point to an average annual deviation of 0.7 percentage points (pp), with the governor pointing out that the growth deviation “it is not sustainable and needs to be corrected”.
As stated in the Economic Bulletin, “after each year’s budget execution, deviations from the approved plan will be recorded in the Member State’s control account, and may not exceed 0.3 pp of GDP per year or 0.6 pp of GDP cumulatively”.
“Thus, Banco do Portugal’s projections indicate a risk of default, both in annual and accumulated terms”, concludes the agency.
