LISBON: The International Monetary Fund expects Portugal's fiscal position to loosen in 2016, for the second year running, and for economic growth to slow as the country remains weighed down by high debts, contrary to more optimistic government forecasts.
In a statement after a monitoring visit to Portugal following the country's 2011-2014 bailout, the IMF said it expected Portugal's budget deficit this year at 3.2 percent of GDP, well above 2.6 percent envisaged by the government.
The projection is based on the new Socialist government's 2016 draft budget, which was presented last month to Brussels. Lisbon is currently discussing changes to the blueprint with the European Commission after Brussels asked for additional measures.
The IMF also said it expects growth to slow to 1.4 percent from last year's 1.5 percent as the one-off impacts of lower oil prices and a weaker euro wear off and Portugal's heavy debt burden weighs on economic activity.
That growth forecast is well below the government's budgeted estimate of 2.1 percent. "Given that the economy is still facing high debt levels and structural constraints, IMF staff expects growth to ease gradually as the impact of supportive external conditions fades," the IMF said in the statement.
Comments
Comments are closed.